No Late Filing Penalties for CGT Payment

HMRC has confirmed it will not charge late filing penalties for capital gains tax (CGT) payment on disposals of UK residential property by UK residents made by 31 July 2020.

The announcement came in a question and answer factsheet shared with ICAEW’s Tax Faculty. The gov.uk has not published the information yet but HMRC has confirmed it on April 9.

HMRC stated:

“To help those selling properties familiarise themselves with the change in the rules and a new on-line process, HMRC is allowing a period of time to adjust and will not issue late filing penalties for CGT payment on account returns received late up to and including 31 July 2020.

“For UK residents, this means transactions completed between 6 April and 30 June 2020 and reported up to 31 July 2020.

“Transactions completed from 1 July 2020 onwards will receive a late filing penalty if they are not reported within 30 calendar days.

“Interest will accrue if the tax remains unpaid after 30 days.”

Read our Blog Capital Gains Tax: New rule for property owners

ICAEW Tax Faculty observes that although HMRC has allowed more time and will not charge late filing penalties, they will still run interest on the CGT due. So ICAW recommends filing and paying as soon as possible. The easement appears to apply to UK residents only; the reporting requirement is not new for non-residents and late filing penalties will apply.

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HMRC Q&As

HMRC’s factsheet provides answers to questions, including:

• I’m a UK resident and I want to sell a residential property in the UK, what’s changing?
• What if I don’t live in the UK?
• What do you mean by a UK residential property?
• Are all disposals of UK residential properties within these new rules?
• When do I have to tell HMRC and pay the CGT?
• What do you mean by taking a ‘flexible approach’?