When do you have to pay your Capital Gains Tax?

If you personally sold an asset that is subject to a Capital Gains Tax (CGT) charge at any time during the tax year ending 5 April 2019, this tax will need to be paid 31 January 2020.

The rule is that CGT is payable on the 31 January after the end of the tax year (5th April) in which the asset subject to CGT was sold.

Accordingly, if you know the amount of the taxable gain and the amount of CGT payable, you still have almost ten months after the tax year end to accumulate the funds to pay the tax.

Hopefully, when you sold the asset you were advised of the likely tax charge and reserved funds from the sale proceeds to settle the liability; after undertaking the necessary research – or professional advice – to claim any available exemptions or reliefs?

And there is still time to consider CGT planning

Although the stable door has closed – claims for any reliefs can still be made as part of your self-assessment return for 2018-19.

It is beyond the scope of this article to list all the reliefs that can be claimed to reduce a CGT bill (please call for advice) but we can help you consider your options.

We will need to know the following details to better consider these options:

  • A description of the asset(s) you have sold
  • The disposal proceeds (what you received for them)
  • Any costs associated with the sale (auction fees etc)
  • The date you bought the asset you have sold and what it cost you originally
  • Any costs you have incurred since you bought the asset that have improved it in some way: for example, the costs of extending a property.

You have plenty of time to plan for the payment of your CGT liability for the tax year to 5th April 201 as the latest date to pay is 31 January 2020 – and we recommend that you fully consider your planning options before submitting your 2018-19 tax return. This has to be submitted by 31 January 2020 as you may know.

If you don’t submit an annual tax return, you will need to submit details to HMRC using the “real time” Capital Gains Tax service.

The following instructions on this option are reproduced below.

However, even if you use this option, it is still advisable to take professional advice on the computation of the chargeable gain to ensure you only pay what is due and no more.

You can use the ‘real time’ Capital Gains Tax service if you’re a UK resident.

You’ll need a Government Gateway user ID and password. If you do not have a user ID, you can create one when you report and pay. When you use the service, you’ll need to upload PDF or JPG files showing how your capital gains and Capital Gains Tax were calculated.

When to report

You can use this service as soon as you’ve calculated your gains and the tax you owe. You do not need to wait until the end of the tax year. You must report by 31 December following  the end of the tax year in which you had the gains.

After you’ve reported your gains, HMRC will send you a letter or email giving you a payment reference number and telling you ways to pay.

Do not pay your Capital Gains Tax bill until you’ve received your payment reference number.

CGT planning

Talk to our Chartered Accountants here at THP to find out how we can help, with offices in ChelmsfordCheamWansteadSaffron Walden and London City.

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