Back in 2020, HMRC introduced changes to the way you report and pay CGT on property. Before then, if you sold a property, you would report any capital gains on your Self-Assessment Tax Return. However, from 6th April 2020, you had only 30 days to report and pay CGT. From 27th October 2021, the deadline was extended to 60 days. However, figures show that 20% or more of people are failing to submit their CGT returns on time – and have faced penalties as a result.

Late CGT returns

Athough these figures are HMRC estimates, they are truly astonishing. For 20% of people to miss the deadline, something is clearly going wrong.

The main reason for missing the deadline is lack of awareness. HMRC’s efforts to publicise the changes to the system have hardly been stellar. Yes, the taxman has issued press releases, but the message is clearly not reaching thousands of people who need to hear it.

CGT late reporting penalties

The big problem with missing the CGT reporting and payment deadline is that you get slapped with penalties. Currently, these are as follows:

  • £100 if the return is not filed within 60 days (or 30 days between 6/04/2020 and 27/10/21)
  • An additional £10 per day for up to 90 days if the return is over 3 months late
  • £300 or 5% of any tax due (whichever is greater) after 6 months
  • A further £300 or 5% of any tax due (whichever is greater) after 12 months

This can quickly get expensive. Imagine you owe £40,000 in CGT after selling a property. This are how the late submission fines can add to that bill.

  • On time: CGT bill of £40,000
  • 1 day late: £40,100
  • Just under 6 months late: £41,000
  • 6 months late: £43,000
  • 12 months late: £46,000

CGT reporting misunderstandings

Unfortunately, many people have been penalised for failing to understand how the CGT reporting regime works. In some cases, people reported their CGT in their Self-Assessment Tax Return (SATR) before making the separate property return. The problem then arose that HMRC’s system blocked you from making an online property return if you’d already completed your SATR. This meant you had to contact HMRC and ask for a paper return – which isn’t helpful if the 60-day deadline is looming.

How to avoid CGT penalties

While there’s a lot to criticise about the current system of reporting CGT on property, the bottom line is that we all have to comply or get fined.

That’s why we’ve put together our 48-hour Fast Track CGT Service. If you supply us with the information we need, we’ll calculate and submit your return within 48 hours. It’s even better if you get in touch before you sell the property. If you do, we can then advise you on ways of potentially cutting your tax bill. That’s got to be a lot better than handing over fines to the taxman!

Need further advice on any of the topics being discussed? Get in touch and see how we can help.

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    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.

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