Limited suspension of late filing penalties for CGT UK property disposals returns

    Contents

  1. CGT UK property disposals compliance regime — overview
  2. Interest and penalties

CGT UK property disposals compliance regime — overview

The CGT UK property disposals compliance regime applies to the following disposals by individuals, personal representatives, trustees and partnerships:

  • 6 April 2019 onwards ― applies to non-residents who directly or indirectly dispose of an interest in UK land (whether residential property or non-residential property)
  • 6 April 2020 onwards ― UK residents who directly dispose of an interest in UK residential land (not non-residential land)

FA 2019, s 14, Sch 2, para 1

Under the regime, the taxpayer has 30 days from the date of completion of transaction (not the date of exchange of contracts) to complete a CGT UK property disposals return and pay the estimated CGT due. There are various exemptions in the legislation, including for disposals that take place at no gain / no loss and disposals by UK residents where there is no CGT due (eg there is a loss or the gain is fully covered by principal private residence relief). For full details of the compliance regime, see the Disposals of UK land ― capital gains tax compliance regime guidance note.
FA 2019, Sch 2, paras 1(2), 3-6

Interest and penalties

Due to the coronavirus pandemic, HMRC has suspended late filing penalties in respect of disposals that are completed between 6 April 2020 and 30 June 2020, so long as the CGT UK property disposals return is filed by 31 July 2020. If the return is filed after 31 July 2020, the normal late filing penalties apply. This suspension applies to disposals by UK residents and non-residents. Late filing penalties apply as normal to disposals that are completed on or after 1 July 2020.

The HMRC guidance states:

‘Due to coronavirus (COVID-19), [UK residents / non-residents] will not get a late filing penalty for any transactions completed on or after 6 April 2020 to 1 July 2020 and reported up to 31 July 2020.’

However, interest continues to accrue during this period if the CGT due is paid late. The current rate of interest on late paid tax is 2.6% per annum.

Late payment penalties are levied only where any CGT due remains unpaid after 30 days following 31 January after the end of the tax year in which the disposal is made. Therefore, during this coronavirus period the taxpayer will only suffer an interest charge where the tax is paid late.
FA 2009, Sch 56, para 1