CGT: almost 20% of UK property returns late
New rules for reporting sales of UK residential property were introduced on 6th April 2020. This 30-day reporting and payment system for declaring capital gains on UK residential property was established by the HMRC and have now been in place for over 2 years.
These new rules have been poorly advertised and many taxpayers are not aware of their obligations. It also seems some conveyancing solicitors are not reminding clients of their obligations in this respect and of course in the eyes of HMRC, it is the taxpayer’s duty to keep himself up to date with the changes in the tax law so that they know they are required to make a disclosure.
According to HMRC’s figures, approximately 20% of taxpayers, who had capital gains to declare from UK residential property, did not report and pay the capital gains tax (CGT) required in 2021/22.
Penalties for filing late were waived for the first three months and the filing period was extended to 60 days from 27th October 2021, as it became clear HMRC were not allowing taxpayers sufficient time to meet the deadline. Despite this, there were still many taxpayers who were not able to make the deadline.
Compliance so far
HMRC’s CGT statistics show that nearly 20% of the UK property returns that were submitted for residential property disposals in 2021/22 were filed late. In comparison, 28% of the UK property returns were filed late in 2020/21.
| Tax year | UK property returns | *Late UK property returns | Total CGT due |
| 2021/22 | 137,000 | 26,500 (19.3%) | £1,699m |
| 2020/21 | 90,000 | 25,300 (28%) | £1,139m |
Penalties
These new CGT reporting rules have doubled the work for the reporting required by the taxpayer and their agent. It also doubles the risk of a late filing penalty. HMRC’s electronic systems are not streamlined and do not fully link through to the self-assessment system meaning that taxpayers have to report the same gain twice. Firstly, on the UK property return and secondly on their self-assessment (SA) tax return. Only in very exceptional circumstances will the taxpayer be allowed to not submit a UK property return.
HMRC is now pursuing taxpayers who have not filed a UK property return for an appropriate disposal in 2020/21. In addition, the HMRC are insisting that the taxpayer should now file a paper version of the UK property return, called a ‘PPDCGT’ form. This is an attempt to prevent late filing penalties from increasing.
Cost to the taxpayer for a late UK property return
The penalties for a late UK property return are set to the following structure:
- 1 day late: £100.00
- More than 3 months late: £10.00 per day up to 90 days
- Over 6-12 months late: greater of £300.00 and 5% of tax due.
Technical guidance
Unfortunately, HMRC’s systems are clunky and not easy to follow if you don’t understand the system, which can be attributed to the HMRC’s lack of guidance about the new CGT reporting system. However, there is now technical guidance available in Appendix 18 – Capital Gains Tax (CGT).
If you need any help with CGT, or have any further questions, get in touch with our tax team on: 01903 2034094
