You may be aware that, in the Autumn Budget 2021, the Chancellor extended the CGT deadline on property sales. From 27th October 2021, you now have 60 days instead of 30 to prepare and file your CGT return, plus pay over any tax due.
This may seem like welcome news at first glance. But it could be very easy to lull yourself into a false sense of security.
Why? The Chancellor granted an extra month partly because many individuals and their agents were finding it difficult to complete and file their CGT returns within 30 days. And little wonder. Before 6th April 2020, you simply declared any CGT you owed on your next Self-Assessment Tax Return. Anything you owed was due by 31 January following the end of the tax year in which you sold the property.
Is a 60-day deadline really long enough?
In reality, 60 days is still a very short period of time in which to prepare and submit a CGT return. You need to gather together all sorts of information. This includes the original purchase date, the dates and costs of improvements you’ve made over the years, plus all sorts of other evidence. Then if you’re wise, you’ll talk to an accountant to get some tax advice. This is something that most solicitors aren’t authorised to give you.
Yet the minute you sell your property, the 60-day clock starts ticking.
The problem is also made worse because HMRC’s CGT reporting systems aren’t really up to scratch. Because CGT reporting is no longer done via Self Assessment, some people have overpaid CGT. This is because they weren’t aware of their income level for the relevant tax year. At one point, if you sold different properties in different tax years, it would send HMRC’s systems into a tailspin – giving you inaccurate calculations.
To date, HMRC has been relatively lenient with penalties. This is probably because of the teething issues with the new CGT reporting system. That said, HMRC issued 13,113 late filing penalties in the last half of 2020.
The worry is that, with an extended 60-day payment window, HMRC will begin to be less understanding about late filing. This can be extremely expensive. If you file 12 months late, you could be charged a penalty of 5% of the tax due. If you pay late, that attracts fines of its own – 5% of the unpaid tax at 30 days, six months and twelve months.
How can I beat the CGT deadline?
At THP, we offer a dedicated CGT planning service for people who sell property. This not only ensures that all paperwork is completed and filed within 60 days, but it can provide you with valuable tax planning advice. If possible, we would recommend you talk to us before the sale completes and the clock starts ticking – that way we may be able to offer you more tax planning options. Either way, don’t let the 60-day rule make you think you’ve got plenty of time to deal with CGT – you haven’t!
About Jon Pryse-Jones
Since joining THP in 1978, Jon Pryse-Jones has been hands on with every area of the business. Now specialising in strategy, business planning, and marketing, Jon remains at the forefront of the growth and development at THP.
An ideas man, Jon enjoys getting the most out of all situations, “I act as a catalyst for creative people and encourage them to think outside the box,” he says, “and I’m not afraid of being confrontational. It often leads to a better result for THP and its clients.”
Jon’s appreciation for THP extends to his fellow team members and the board. “They really know how to run a successful business,” he says. He’s keen on IT and systems development as critical to success, and he continues to guide THP to be at the cutting edge and effective.