Extension to Capital Gains Tax reporting and payment
I saw in the Budget that there is an extension to Capital Gains Tax reporting and payment to 60 days. I didn’t know we had to report this as I’ve sold a bit of land recently. Should I have reported this by now?
Providing there was no residential building on the land then you don’t need to worry! The changes to reporting Capital Gains Tax (CGT) came in on 6 April 2020 and it has caught quite a few people out since.
If you sell or gift an interest in any residential property and there is CGT due, you need to report and pay the tax within 60 days of completion (or 30 days if the sale was before 27 October 2021). As a reminder, Capital Gains Tax rates for residential property are 18% and 28%, the higher rate being charged for any gains which would fall into your income tax higher rate band.
You still need to declare the Capital Gain in your Self Assessment Tax Return if you prepare one but you will have credit for the tax already paid. However when it comes to doing your tax return, it may be that you have underpaid or overpaid tax. This happens especially when your income levels for that tax year are not known at the point of paying the CGT and you’ve had to estimate the amount subject to 18%.
If you do not report and pay the CGT under the 60 day reporting regime, you can be liable for penalties and interest, so it is important to get it done as soon as possible even if the return is late.
For all other assets including land or commercial property, the gain will still need to be declared in a tax return and any tax due will be payable by 31 January following the end of the tax year in which the gain occurs.