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Kirk Rice Blog

Capital Gains Tax On UK Property And LandWritten on October 20, 2020 by Kirk Rice LLP

Capital Gains Tax On UK Property And Land
Taxing Times Questions

The Question:

I have just sold my UK rental property. I believe I have made a capital gain on the sale and need to know what is required of me for tax purposes. Is there anything I need to do?

Kirk Rice LLP answers:

Yes there is, and quickly! A new law came into force on 6 April 2020 requiring all UK residents who sell, gift or otherwise transfer UK residential property or land on which a capital gain arises to report that gain to HMRC. Any capital gains tax on UK property arising, must be paid within 30 days of completion of the sale.

These rules (with some minor variation) also apply to non-UK residents (see further below), trustees of trusts selling UK land and property, and the personal representatives/executors of estates.

The report is done via a ‘Capital Gains Tax on UK Property’ account which the owner (seller) of the property must set up with HMRC.

In summary, the capital gain should be computed using the current CGT rules and the tax estimated before an account is set up with HMRC and a report of the disposal and resulting tax filed with HMRC. The tax is then paid using the payment reference number provided by HMRC.

Whilst this sounds straightforward, computing the capital gain can be complicated due to the reliefs available and apportionments between chargeable and non-chargeable periods of ownership, and the reporting process itself can be somewhat involved.

We at Kirk Rice LLP are able to undertake all aspects of the computational and reporting work for you, but in doing so, you should be aware that a digital handshake will be required between you and our firm to enable us to have access to your Capital Gains Tax on UK Property account. This requires your involvement in the initial set-up of the account.

Where a disposal is reported to HMRC after the 30-day filing deadline, a penalty will be levied, and interest will be applied to the late payment of tax. It is, therefore, imperative that you act quickly.

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For non-UK residents selling UK land or property, the requirement to report a disposal covers all direct and indirect disposals, whether or not a capital gain or loss arises. The overseas owner of the property will need to set up a Capital Gains Tax on Property account with HMRC and verify their identity in the course of setting up the account.

A word about the digitally excluded amongst us: for those property owners who, as a result of their disability, age, location or religious belief, are unable to use online services, there is the option to file a paper report with HMRC. They, or their appointed helper, will need to contact the HMRC helpline on 0300 200 3300 and ask for paper form PPDCGT. This form will only be granted to someone falling in the digitally excluded category. Those who are digitally challenged will still be expected to file an online report with the help of a family member, friend or tax adviser/accountant.

Finally, because of the way capital gains tax is currently calculated, it may not be possible to definitively work out the final tax position at the time of sale of the property. Where best estimates are used HMRC will expect the report as filed to be amended at a later date. At the time of writing, this cannot be done online, but HMRC has said that in due course they will release information on how such amendments may be made.



Any reader interested in discussing separation and divorce tax implications further can telephone 01344 875 000 or email info@kirkrice.co.uk to arrange a call.

Please note: answers are given for general guidance only and specific advice should be taken before acting on any of the suggestions made.