The lead up to every Budget will often involve discussion about possible changes to the tax system. This was particularly the case prior to Wednesday’s Budget, given the amount of borrowing and spending caused by the pandemic.
However, as it transpired, Mr Sunak’s focus was less about direct tax, and more about further spending.
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In particular, private client taxation barely got a mention. But within the supporting documentation, there was one small, but hugely helpful, announcement. Where a UK resident incurs a capital gains tax charge on the disposal of UK residential property (or a non-UK resident, on any type of UK property), they now have 60 days to report and pay that tax to HMRC (commencing the day of completion).
It will apply to completions on or after Budget Day (27 October 2021). Previously the deadline was just 30 days (for completions on or after 6 April 2020, when the rules were first introduced), which was unnecessarily short. Indeed, the Office of Tax Simplification (OTS) said in May 2021 that the deadline was missed one-third of the time.
Given that there is penalty for missing the deadline, it was the OTS themselves who suggested extending the period to 60 days, and fortunately the Government have listened. HMRC will still get their money relatively quickly, but in a more practical and suitable manner.
It is rare (but not impossible) for a UK resident to incur a capital gains tax charge when they sell their main home. Often (but not always) it will be when, for example, they sell a second home or a property which they rent out.
How Moore Barlow can help
If you are disposing of a UK residential property and require assistance with either calculating whether you do have any capital gain tax to pay, and/or preparing the tax return itself, please do not hesitate to get in touch.