If you don’t pay your CGT on time, you will get late penalty fees. Find out more about how to avoid this and the current regulations.
(4 minute read)
When selling a property, but also when exchanging it, transferring it, or gifting it to someone else, you might make gains on it, i.e., capital gains. The amount you pay depends on the gain which can be worked out using a calculator.
We will cover:
- What is the 60 day CGT reporting
- How much you pay in late penalty fees if you miss the deadline date
Who must pay CGT?
The rules on CGT apply mainly to landlords and second-home owners but can also affect anyone who owns a property even whilst not living in it.
For example, sales of commercial property, residential buy to let property, and the sale of second homes or holiday homes are all examples of properties liable for Capital Gains Tax.
According to gov.uk, “If you sold a UK residential property on or after 6 April 2020 and have tax on gains to pay, you have to report and pay using a Capital Gains Tax on UK property account.”
Both UK and non-UK residents must file Capital Gains Tax returns on their gains when disposing of residential property, by calculating, reporting and paying to HMRC.
UK residents must report their capital gains on UK residential property only if there is tax to pay. Non-UK residents must report earnings on UK residential property and land to HMRC even if there is no tax to pay.
Both have a deadline of 60 days to report returns and/or pay CGT, otherwise incurring in late filing penalties.
How to report and pay CGT?
You report your capital gains and pay CGT by registering to an online service via gov.uk (UK Property Service). HMRC expects you to use this service, but you can also request a paper form if necessary.
If you decide to make this report yourself and you know how much you’ve earned, simply register with the service. In case you decide to do it through an agent, you must set a CGT account via HMRC.
Most UK taxpayers can usually earn a certain amount free from CGT, called the Capital Gains Annual Allowance. The threshold that makes earnings tax free is £12,300 for the 2022/23 tax year. This means individuals can earn up to that amount without paying CGT.
60 Days CGT Reporting Deadline
Since 6 April 2020, the rules on CGT changed but came into effect later in that year. Previously, the deadline to report was 30 days, but this was extended to 60 days for UK residential properties sold on or after 27 October 2021.
If you complete and submit a Self Assessment Return which includes the sale of a property within 60 days of the sale date, you do not need to report the sale on a Capital Gains Tax return. This therefore means the tax liability will not be due for payment until 31st January following the 5th April to which the SA return was completed.
If you don’t pay CGT on time, you will be fined with late penalty fees with added interest. There are different time frames for how much you pay these penalties depending on how much time passed after the completion date and the 60-day time window.
What are the late penalty fees?
If you pay after the 60 days, you will pay a late fee of £100.
After that, other penalties are added with interest:
- If 3 months late, a daily penalty of £10 per day applies for up to 90 days (max £900)
- If 6 months late, 5% of tax due or £300, whichever is higher
- If 12 months late, 5% of tax due or £300, whichever is higher.
According to HMRC, more than 25 thousand people filed their returns late in the 2020-21 tax year. In the tax year of 2021-22, 23,600 people incurred in late penalty fees.
To avoid the 60 day CGT reporting being late, make sure you know the correct procedures. We hope this article helped clear some doubts. If you still feel like you need assistance on CGT, our team at Tax Expert will help you. We are up to date with legislation and can also know whether you are eligible for any tax relief.
Contact us today at 01772 788200 to find out more about how we can help, or WhatsApp us out-of-hours at 07787 010190. Sending an e-mail is simple too, just fill out the short form below and we’ll get back to you!
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