Reporting residential property disposals from 6 April 2020

01 Jun 2021

Current structure

The way in which UK residential property sales are reported to HM Revenue & Customs will change dramatically on 6 April 2020. Those disposing of property need to be aware of the new reporting requirements, which come with a short 30-day deadline and payment date, together with changes to how any capital gain arising is calculated. WR Partners’ suggestion to any residential property owners who are either in the process or planning to sell their property(s) is to seek immediate advice to understand how these requirements will affect you.

 A similar regime has been in place since April 2015 for non-residents disposing of a UK residential property.

Given the short deadline, HMRC are asking that taxpayers complete the new tax return to the best of their ability, with some estimates and assumptions being made if all relevant information is not available. A full Self-Assessment tax return may then be required to update the information.

It will also be necessary to make a reasonable estimate of the Capital Gains Tax (CGT) arising, as tax will also be payable within 30 days. For individuals, this may also bring the need to estimate taxable income for the year to ensure that any CGT is paid at the correct rate.

If multiple properties are disposed of in the same tax year then a return and payment on account must be made for each disposal.

Who does this apply to?

In summary, if you satisfy all the conditions outlined below, you will be required to declare any relevant disposal to HMRC within 30 days of the completion date of the sale, and make a payment on account of any CGT arising:

  •  You are a UK resident (and not taxed on the remittance basis in respect of any overseas gain concerned)

  • You have exchanged and completed the disposal of a residential property on or after 6 April 2020

  • The property has not been your main residence for the whole period of ownership, and;

  • You have made a gain on the disposal, which is chargeable to CGT.

If disclosure is not made to HMRC within 30 days of completion, late filing penalties will be charged. The penalty can reach £1,600 per return, if filed more than 12 months late. HMRC will also charge interest if the tax is not paid on time.

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