30-days deadline on property sales
Rules introduced in April 2020 apply to UK resident disposing of a residential property in the UK making a gain which is liable to CGT. The Uk taxpayer has 30 calendar days from the date of completion to inform HMRC and pay any tax owed.
OTS notices that this was a “very ambitious target”. The result is that many sellers are missing the deadline since it has been cut to 30 days.
OTS found that out of 51,300 CGT returns submitted to HM Revenue and Customs between 6/04/2020 and 6/01/2021, 16,800 were filed after the 30-day deadline.
Selling a house is a complicated process and having all the necessary paperwork ready within 30 days and the cash necessary to pay the tax bill at the same time, seems just too much for many taxpayers.
The OTS has therefore recommended to the government to consider doubling the deadline to 60 days, and/or to require estate agents/conveyancers to properly inform their clients about these requirements and deadlines.
Divorcing couples
Under current rules, transfer of assets between married couples or civil partners are not subject to an immediate CGT charge.
But if a couple separate, but the transfer of assets is only made in the next tax year, then it is treated as taking place at market value and CGT might be due. Depending on the time of the separation, this could be particularly challenging. If for example a couple separate on 1st April, 2022 they would only have until 5th April 2022 to transfer their assets without the transfer being subject to CGT charge.
The OTS report has therefore suggested an extension of the ‘no gain no loss’ window on separation to the later of two years after separation, or any reasonable time set for the transfer of assets in accordance with a financial agreement approved by a court.
