Individuals who are UK resident and dispose of an interest in residential UK property, are required to report this to HMRC within 60 days of completion and settle any liability if there is Capital Gains Tax (CGT) to pay. This is in addition to reporting on an annual self-assessment Tax Return (if the individual is required to file one).
For individuals who are considered non-UK resident, there are additional reporting requirements, and a declaration will be required irrespective of the CGT position, and this also extends to non-residential UK land and property.
Reporting can be done electronically using the Capital Gains Tax on property reporting service. Failure to report disposals within 60 days and pay the CGT due will result in HMRC levying late filing penalties and interest.
Generally speaking, in computing the CGT liability, tax relief is available for costs incurred in connection with both the initial acquisition and the sale of the property, for example estate agent and solicitors’ fees, and capital expenditure made to the property.
In addition to the above, relief is also available for any gains accruing in the period the property has been occupied as an individual’s main residence, and the last 9 months of ownership. If the property has always been occupied as an individual’s primary home, then relief will be available in full – and no CGT will be payable.
The usual 60-day reporting deadline will not apply in these circumstances, where the seller is UK resident. The private residence rules are modified for non-resident individuals and there is still a reporting requirement even where no CGT is payable.
However, there are some situations where only partial relief is available, or not available at all, such as if the property was used for rental purposes or if part of it was used for business.
This can be a complex area – we strongly suggest that you seek professional advice if you are considering or have made a disposal of UK property. Please call 01825 746 888 or email mail@sgllp.co.uk for expert assistance.