When to report and pay Capital Gains Tax

The annual Capital Gains Tax (CGT) exemption for individuals is £11,700 for 2018-19. A husband and wife each benefit from a separate exemption. Same-sex couples who acquire a legal status as civil partners are treated in the same way as married couples for CGT purposes.

CGT is normally charged at a simple flat rate of 20% and this applies to most chargeable gains made by individuals. If taxpayers only pay basic rate tax and make a small capital gain, they may only be subject to a reduced rate of 10%. Once the total of taxable income and gains exceed the higher rate threshold, the excess will be subject to 20% CGT. A higher rate of CGT applies (18% and 28%) to gains on the disposal of residential property (apart from a principal private residence).

The usual due date for paying CGT to HMRC is the 31 January following the end of the tax year in which a capital gain was made. This means that CGT will be payable for any gains made during 2018-19 on or before 31 January 2020. The usual way to report a gain is to complete the relevant sections of the Self Assessment tax return.

HMRC also offers a ‘real time’ Capital Gains Tax service that allows taxpayers to report any gains and pay straight away. Using this service would obviously mean paying any CGT due before the official deadline so we would assume that the use of this service would only be appealing under limited circumstances. Taxpayers using this service must wait for HMRC to issue a payment reference number before making payment.

There are also special payment and reporting requirements if you live abroad and sell a UK residential property, and you must inform HMRC within 30 days of the sale. The notification must be made whether or not there is any non-resident CGT to be paid. Any non-resident CGT that is due must also be paid within 30 days of the conveyance date. There are penalties for late payment, and we would strongly advise that you monitor any CGT due and ensure the relevant payment deadlines are met.

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