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Capital Gains Tax

Mon 14 Jun 2021

Heather Revitt FARLA, Partner

Capital Gains Tax

 

ARLA Propertymark of which Thacker and Revitt are members, has thrown its weight behind a call for HMRC to extend the time limit for the payment of Capital Gains Tax on buy to let and other investment property sales.

A report by the Office of Tax Simplification on Capital Gains Tax, issued last month, called for a series of changes.

They include extending the 30 day reporting and payment deadline which has recently led to problems in the housing market. 

The 30-day deadline was introduced in April 2020 and slashed the previous time by which owners with taxable gains on residential property must report and pay CGT by as much as 22 months.

About a third of the buy to let investors and other property owners who incurred capital gains tax from property sales in the last financial year failed to file on time because of the restricted 30 day deadline. 

Comments made towards the OTS report during its official consultation period, concerning the new 30 day deadline, were “overwhelmingly negative” and the HMRC told the OTS that 16,800 of 51,300 returns made between April 6 2020 and January 6 2021 missed the deadline.

Now Timothy Douglas, ARLA’s policy and campaigns manager, says: “Due to the impact of property tax holidays across the UK, property buyers continue to fuel the post-Covid economy. 

“Nevertheless, many people have limited awareness or understanding of Capital Gains Tax. Knowledge of the rules is particularly important when selling a buy-to-let property or a second home.

“In response to the recommendations, Propertymark would support extending the reporting and payment deadline because this would allow more people to comply with the rules.”

The Office for Tax Simplification also floats the suggestion of obliging agents, conveyancers or auctioneers to distribute an HMRC-approved standard information pack to customers whenever a residential property is placed onto the market or instructions given to a conveyancer. 

OTS claims this could help taxpayers proactively plan and gather required information in advance of the sale and therefore providing plenty of time in advance of the 30 day period starting.