New rules on property capital gains tax

This is an area which has changed considerably in the last two years. In 2020, the government introduced new rules for reporting and paying tax for individuals and trusts when disposing of a residential property. Previously, gains could be reported in a self-assessment tax return in the tax year after the property was sold but the regulations were changed so that CGT needed to be registered and paid within 30 days of the property disposal.

However, in the Autumn Budget, the chancellor doubled the payment window with immediate effect – capital gains tax for residential property transactions can now be paid within 60 days.

This move comes after it was announced that the 30-day deadline netted the Exchequer an increased revenue of £935m over the tax year 2020/21.

You will also need to complete a ‘Residential Property Return’ and submit this to HMRC to report the gains. If your property is held jointly or in a partnership, each individual owner is required to submit the form.

If you normally complete a self-assessment, you will still need to report the capital gain on your annual tax return as well. These new regulations do not apply if the capital gain is non-taxable for example, if covered by main residence relief.

It is a good idea to get your records up-to-date in advance of selling a property. This should include the date when the property was acquired, the original cost and details of any improvements made. Professional valuations may also be required.