CIOT welcomes doubling of CGT reporting time

The Chartered Institute of Taxation has welcomed the proposal in today’s Budget to extend the deadline for reporting and payment of Capital Gains Tax (CGT) on the disposal of UK land and property from 30 days to 60 days from completion¹.

The Institute has also welcomed changes to CGT legislation that will end the anomaly for UK resident taxpayers involving gains from properties used for residential and commercial (mixed) use.

This was a quirk in legislation that meant taxpayers had to declare capital gains on both portions of a property, despite only being legally required to pay tax owed on the residential portion of the property.

However, the Institute remains concerned that the system for reporting these gains is difficult for taxpayers to interact with and there are low levels of awareness of the requirement to report among taxpayers.

Danny Clifford, Chair of CIOT’s Private Client (UK) Committee said:

“The previous 30-day time limit for disposing of UK land and property has always been challenging, especially so when it involved complicated transactions where information has to be gathered on the ownership history and  estimates or valuations take time to produce.

“Taxpayers also need to register with HMRC before they can make a return online. This can take time and is not always easy.

“Doubling the amount of time available for taxpayers to submit a UK property disposal return is clearly a sensible reform, helping taxpayers to file and pay on time without incurring penalties.”

Remarking on the system for reporting CGT returns, Danny Clifford continued:

“The way that the system has been designed as an ‘add-on’, independent of HMRC’s mainstream system, means there have been significant teething problems with the operation of the system for some groups, including representatives who may be declaring gains on behalf of a deceased person.

“These teething problems are gradually being ironed out and better guidance is being produced –  but there remains a worrying lack of awareness of the obligation to report and pay CGT on UK property disposals especially for taxpayers making a one-off disposal or for non-UK residents selling UK property.

On the changes to CGT legislation ending the mixed-use anomaly, Danny Clifford added:

“Clarifying this change through legislation rather than guidance will give taxpayers certainty that they are fulfilling their reporting obligations. It was never the intention that UK resident taxpayers should have to declare gains made from non-residential properties within 30 (60) days”.