Since April last year any capital gains made on residential property within the UK have had to be reported within 30 days of the sale, for UK residents and non-residents alike.
When it was first introduced HMRC took a lenient approach to potential fines and penalties but now that it’s been on the go for over a year now that leniency has started to fade, which means it’s now more important than ever to calculate and report any gain within 30 days of the sale completion to avoid falling foul of HMRC.
In order to do this you will need a HMRC Government Gateway account, details of the sale itself (the best source of this is always the completion statement that will be prepared and sent to you by your solicitor) as well as the original cost and any enhancement expenditure you have spent on the property over your time of ownership. It would also be helpful if you were aware of how much (if any) of your capital gains tax allowance you had already utilised for that tax year, this will ensure you pay as near to the correct amount of tax as you possibly can, to avoid under or overpaying HMRC.
Not to worry if you get this calculation wrong at all though because so long as you have taken reasonable care in your assessments HMRC will never issue a penalty for an incorrect tax calculation in this instance, the worst that may happen is you would have to pay an amount of interest that would likely be very small in comparison to the gain itself. The tax you’ve already paid will also be taken into account when your personal tax return for that year is being prepared, so any under or overpayment will be corrected at this point and either repaid to you or included in your total liability for that year.
As always if any of this has raised any questions or you needed to check something with a tax expert then please contact 360 on 01482 427360 or e-mail us at email@example.com.