CGT news may not make the headlines very often, but it’s certainly a form of taxation that’s at the forefront of government thinking. Chancellor Rishi Sunak was widely tipped to raise CGT at his Budget in March. Even though he didn’t, the Office of Tax Simplification released a review into Capital Gains Tax. More recently, HMRC released a Capital Gains Tax Commentary as well as a question-and-answer helpsheet to give taxpayers and their agents more clarity about CGT on residential property.
In this post, we’re summarising the headline information from both the new commentary and helpsheet. Of course, if you have any specific questions about CGT, do talk to your account manager here at THP.
CGT News roundup
The government’s CGT Commentary is a summary of statistics relating to Capital Gains Tax. In essence, during the 2019/20 tax year, CGT receipts were up and fewer people paid the tax. Most CGT was also paid by a very small pool of taxpayers.
- During 2019/20 the total CGT liability rose 3% to £9.9 billion
- The number of people paying CGT dropped 6%
- 41% of CGT was paid by those who made gains of £5 million +. This group accounts for less than 1% of CGT taxpayers
- 28% of CGT disposals came from disposals that qualified for Entrepreneur’s Relief.
- The government’s new CGT on property service was used by 75,000 taxpayers to report just over a £1 billion CGT liability on property disposals.
CGT question-and-answer helpsheet
The new CGT on property helpsheet was published by HMRC, after pressure from ICAEW and other organisations to offer better guidance on reporting and paying CGT on property.
You can find a summary on the ICAEW website, where you can also download the full document. Much of it is technical and primarily of interest to accountants or other agents, but there is one particularly useful point that is worth noting:
- If you submit a paper return within 30 days of completing the sale of your property, you will not face a late filing penalty. Once HMRC has the return, it will pause the 30-day payment window. When HMRC then manually raises the CGT charge and sends the taxpayer a letter with a charge reference, taxpayer has 14 days from the date of charge to pay over their CGT.
The helpsheet also offers clarifications on CGT overpayments, agent authorisation, rules for non-residents and a variety of other queries. However, if you plan to dispose of a property, we strongly recommend you talk to a THP account manager as soon as possible. That way, they can work with you to help make sure you don’t pay more CGT than you need.
About Karen Jones
Having worked for one of the world’s largest accountancy firms, Karen Jones uses her tax knowledge and skills to help clients obtain substantial reductions to their tax liabilities.
With an expanding portfolio of tax clients, Karen enjoys the variety her work brings her and particularly likes working with new businesses and people. With a growing number of tax clients, she frequently faces a variety of challenges and relishes the experience she gains as she solves them.
Karen likes the THP ethos: “I like the way the team has a professional, but friendly and down-to-earth approach – it creates a productive atmosphere that benefits everyone.”
Karen’s specialist skills:
- Personal Taxation
- Tax Efficient Planning
- Trust Administration