How do you report your capital gains? What return do you use?

There are different ways that you either can or must report your capital gains depending on whether you are resident, or non-resident and whether you are in or out of Self Assessment.

At a glance

For individuals only: disposals before 6 April 2020

Are you UK resident? No = Gains on UK property reportable on NRCGT returns within 30 days. Tax payable within 30 days if not in Self-Assessment.
Yes  ↓
Do your total capital gains exceed the Annual Exemption?
       Yes        ↓   ↓ No
Do your total proceeds on capital disposals exceed four times the Annual Exemption?
  ↓ Yes
  ↓ No
  Gain is not reportable.
 
Are you already in Self-Assessment? Yes = Can report using real time service but must report on tax return still. Tax due 31 January following end of tax year.
No  ↓
Either report using real time service or register for Self-Assessment. Tax due 31 January following end of tax year.

 

 For individuals only: disposals on or after 6 April 2020

 

Are you UK resident? No = Gains on UK property reportable on NRCGT returns within 30 days. Tax payable within 30 days in all cases.
Yes  ↓
Do your total capital gains exceed the Annual Exemption?
       Yes        ↓   ↓ No
Do your total proceeds on capital disposals exceed four times the Annual Exemption?
  ↓ Yes
  ↓ No
  Gain is not reportable. 
 
Are you selling a residential property? Yes = Must report gains online and pay the tax within 30 days of completion. If you are in self assessment must also include on self assessment return. If not only the 30 day return is required.
No  ↓
Are you already in Self-Assessment? Yes = Can report using real time service but must report on tax return still. Tax due 31 January following end of tax year.
No  ↓
Either report using real time service or register for Self-Assessment. Tax due 31 January following end of tax year.

 

Overview

UK resident

Reporting requirement on disposals before 6 April 2020

  • If you make a capital gain you will need to report it to HMRC if:
    • The total of your gains exceed your available Annual Exemption, or
    • The total proceeds are more than four times the Annual Exemption (for 2019/20 this is £48,000).
  • If the total gains are below the Annual Exemption and total proceeds do not exceed four time the Annual Exemption, you are not required to report them to HMRC.
  • If you have a reportable capital gain(s) before 6 April 2020 you can report this to HMRC in two ways:
    • Using HMRC’s ‘real time’ Capital Gains Tax (CGT) service, or
    • Completing the Self-Assessment tax return.

Real time CGT reporting: Currently outside Self-Assessment

  • If you are currently outside the Self-Assessment regime, you do not have to register for Self-Assessment just to report a capital gain.
  • Instead you can use HMRC’s ‘real time’ service.
  • You can report your capital gain anytime between the date you have prepared your capital gain calculations and 31 December following the end of the tax year in which the capital gain took place.
    • For example, if you sold a holiday home at a gain in June 2018, you could report the gain using the real time service up to 31 December 2019. You could report it before the end of the 2018/19 tax year if you wished.
  • You will need to have or set up a Government Gateway account.
  • PDF or JPG copies of your calculations will need to be attached to your submissions.
  • The deadline for the tax remains 31 January following the end of the tax year, though HMRC will issue a payment reference number once they have processed the gain so that you can make payment sooner if you wish.
  • The main benefit of this system is that it allows for immediate calculation, reporting, and if necessary, payment of capital gains, which will ensure penalties and interest are avoided.
  • If you prefer you can register for Self-Assessment and report the gain on a Tax Return.

Real time CGT reporting: Already in Self-Assessment

  • If you are already in Self-Assessment, you can still use the real time service.
  • If you choose to report under the real time service, you will still have to report the gain on your tax return as well.

Reporting requirement on disposals on or after 6 April 2020

  • For non residential property disposals nothing has changed, see Reporting requirement on disposals before 6 April 2020 above.
  • Gains on residential property disposals must now be declared on HMRC's online CGT disposal return (and the tax paid) within 30 days of completion.
  • Further reporting obligations: 
    • If you are already in self-assessment you should also include the gain on your self-assessment return. Any adjustments to the figures or reliefs claimed can be made here and the tax due will be adjusted accordingly.
    • If you are not already in self-assessment you can register and include the gain on your self-assessment return but you are not required to if you do not have any other income or gains. This may mean you need to register. 
  • It will be possible to amend HMRC's online return after the 30 day window within the normal self assessment amendment window.
    • Amendments will only be permitted "so far as the return could, when originally delivered, have included the amendment by reference to things already done". It would seem that any changes  which do not meet this condition will need to be addressed in the self-assessment return instead.
    • HMRC have announced that they will not charge penalties for late returns until after 31 July 2020. See Changes to CGT reporting: Soft landing period for penalties

  • If no CGT is due the new online return does not need to be filed.
  • This is different to the rules for non-residents where a non resident CGT return must be filed even where no tax is due (see below).
  • In determining whether any tax is due, only losses incurred by the date of completion may be taken into account.
  • The grant of an option over residential property resulting in a capital gain triggers a requirement to file a return and pay the CGT within 30 days despite the fact that the grant and exercise of an option are generally treated as a single transaction on the later date that the option is exercised.

Non-UK resident

  • Non-UK residents are normally outside of the UK CGT regime.
  • UK residential property sold at a capital gain is subject to Non-Resident Capital Gains Tax (NRCGT).
  • From April 2019 all non resident UK property sales and indirect disposals of an interest in a 'UK property rich' entity are subject to NRCGT whether the property is residential or commercial.
  • These disposals must be reported within 30 days of completion of conveyance.

For disposals before 6 April 2020:

  • The NRCGT must also be paid within 30 days unless the non-resident is already in Self-Assessment, in which case it can be paid by the normal 31 January deadline.  

For disposals on or after 6 April 2020: 

  • All NRCGT must be paid within 30 days whether the non-resident is in Self-Assessment or not.

the date of conveyance to report your disposal on the non-resident Capital Gains Tax return, and pay any tax due.

Comments (2)

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I was also under the impression from HMRC that the 'four times of the annual exemption' requirement only applies to the self assessment element, so that if your gain falls within your annual exemption then you don't need to submit a UK Land...

I was also under the impression from HMRC that the 'four times of the annual exemption' requirement only applies to the self assessment element, so that if your gain falls within your annual exemption then you don't need to submit a UK Land Disposal Return within 30 days. Please could you clarify?

The article can be viewed here:
https://www.gov.uk/government/news/get-ready-for-changes-to-capital-gains-tax-payment-for-uk-property-sales?utm_source=df6d7617-fae0-47d9-a7ac-7669a26b59b7&;utm_medium=email&utm_campaign=govuk-notifications&utm_content=immediate

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This comment was minimized by the moderator on the site

Dear Sirs

The above is a very helpful flow chart but HMRC guidance suggests that for non residents disposing UK rental property, post 6/4/20202, they must report using the new CGT online reporting or do they indeed use the NRCGT form as you...

Dear Sirs

The above is a very helpful flow chart but HMRC guidance suggests that for non residents disposing UK rental property, post 6/4/20202, they must report using the new CGT online reporting or do they indeed use the NRCGT form as you suggest ? Problem with online CG reporting is that many non residents cannot set up a Govt Gateway a/c if they dont have UK passport or UK home address (they fail the identity checks), so there appears to be no pratical way for them to comply with the new rules. Jay.

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