Reporting your property disposal within 30 days isn’t the end of things!

Natalie Miller

For the first time, taxpayers who reported one or more capital gains tax (CGT) property disposals under the 30-day rules which came in on 6 April 2020 are having to work out how this interacts with their Self-Assessment (SA) tax return. Sadly, it’s not as straightforward as you’d like to think!

The new reporting process has not been without its complications – the service is intended to operate primarily online and involves taxpayers setting up a specific CGT on UK Property Account, even if they want to ask their agent to submit the report for them. The report must be submitted, and any CGT paid, within 30 days of the completion of the property disposal. If you manage to do those things, it’s tempting to think that you don’t need to worry about it again!

However, the short timescale may mean you have to make some estimates, especially about how much tax to pay – once you know your position for the complete tax year in which you sold the property, you need to remember to check your original estimates again.

In certain circumstances, you or your agent can go back into your online report and change it by twelve months after 31 January following the tax year of the disposal. Alternatively, you can submit a new property return to replace the old one. These options are useful as they includes situations where you need to amend your estimate of your income (and hence the rate of CGT), where you get a definitive valuation of the property, where you want to claim a relief or your residence status has changed. You can then claim a refund or pay any extra CGT via your Property Account.

But if you are within the SA rules and have to complete an annual tax return or if,  for example, you sell other assets in the year and want to claim a capital loss, you can’t amend online and instead will have to make all the amendments in your SA return. HM Revenue & Customs (HMRC) have anticipated this and have included new boxes on the tax return where you can tell them about the property disposal report.

When you complete your SA return, you may find you didn’t pay enough CGT on the property disposal – the balance will be due as part of your usual SA liability. On the other hand, you may have erred on the side of caution and over-estimated the CGT – if you’re due a repayment, the system currently shows a nil amount. HMRC have confirmed that you will have to telephone them to ask for a manual adjustment to offset the overpayment – we’re waiting to hear whether they will allow agents to call on your behalf.

Hopefully, things will become more automated in the future but, in the meantime, the system is not straightforward.  In particular, if you made a one-off property disposal and are not familiar with either the rules or HMRC processes, you can’t assume that the system will automatically check everything for you. As usual, if in doubt, ask for help!

Find out more about the reporting rules generally here.

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