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In search of the CGT reporting tool

Gains on residential property must now be reported, and the tax paid, within 30 days of the sale. But finding out how to report the gain is not an easy task, as Neil Warren explains.

15th Sep 2020
Independent VAT Consultant
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A minor outcome of the Covid-19 crisis was that an agreement I had to sell a flat in March 2020 fell through, so I had to find another buyer, and the sale eventually completed in August. This had two unfortunate outcomes:

  • The £40,000 lettings relief allowance was abolished on 5 April 2020, which would have averted a capital gains tax (CGT) bill. I lived in the property for some of the period of ownership.
  • I had to do a CGT return and pay the tax within 30 days of the sale. This is a new requirement for gains arising on residential properties from 6 April, where the seller is a UK resident.

Where is the return?

My first thought was that all I had to do was log into my personal tax account with HMRC and there would be an easy-to-find tab somewhere on the home page, saying something along the lines of “Capital Gains Tax Property Return.”

That was perhaps over-optimism on my part as I frantically searched for a link. I felt like a hen scrabbling in the dirt for scraps but still no joy.

I therefore decided to log into my agent account and go to the link for my personal self assessment tax returns. In effect, I am a client of my own company for self assessment purposes. This proved abortive as well.

Brainwave

I was beginning to think that I would have to call HMRC’s helpline for a steer. But then I had a brainwave: I had dealt with a client’s pension query earlier in the year, when I was frantically looking for his HMRC Lifetime Allowance Protection Certificate in his personal tax account. I remembered that I cracked that problem by going into his personal tax account but through a different route, the electronic back door.

I googled “CGT UK property account” and chose the option of “Report and pay Capital Gains Tax” followed by “Start” and bingo, it all works and I could create my account. I had to enter the 12-digit government gateway code and password for my personal tax account. When you are doing this don’t forget to click on the link that confirms you sold the property on or after 6 April 2020 and not before.

Tip: Check the date the contracts were exchanged for the deal, as this is the date that fixes the CGT tax point, although the reporting deadline runs from the completion of the deal, which may be some weeks or months later.

Easy return

Once I had found the return, the rest of the process was easy. The questions are very logical and it is just a case of entering the relevant numbers for buying price and selling prices; costs linked to both eg estate agent fees on the sale and legal expenses for both; improvement costs could also be entered. It also required the buying and selling dates and address of the property.

The CGT return asked for an estimate of my projected income from other sources until 5 April 2021. This is understandable because the taxpayer’s total annual income determines the rate of CGT that is due on property gains; 18% for basic rate taxpayers and 28% for higher rate taxpayers.

CGT allowances

At the end of the process, I entered the amount of credit I wanted for main residence relief, including the last nine months of ownership, and also how much of my annual CGT exemption of £12,300 I wanted to use. After all this was done, it told me the CGT that needed to be paid, which agreed to my own calculation.

Conclusion

As the old saying goes, if you know where the treasure is hidden, you can get rich very quickly.

I hope this article will help you or your clients find the entrance door a bit quicker than me, in order to submit a CGT return on property disposals within the new one-month deadline.

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Replies (9)

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By Paul Crowley
16th Sep 2020 05:05

Superb
Much appreciated. Seems not much help on the real detail anywhere.

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By cmiskin
16th Sep 2020 08:01

See https://www.icaew.com/technical/tax/tax-faculty/taxguides/2020/taxguide-... from ICAEW Tax Faculty where we have tried to fill the gap in guidance.

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By Justin Bryant
16th Sep 2020 09:36

Or as has been mentioned here you could just phone HMRC for a paper return that they will accept with no problem.

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Replying to Justin Bryant:
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By Homeworker
16th Sep 2020 11:59

Justin Bryant wrote:

Or as has been mentioned here you could just phone HMRC for a paper return that they will accept with no problem.


Easier said than done! I had to call the agent helpline three times for an elderly client and each time they had no idea what I was talking about and the first one sent out the SA pages of the tax return, while the second one was going to until I realised and stopped her. The third time, having waited over half an hour to get through, I was cut off before I could complete the conversation. This seems to happen quite often nowadays.
That said, we did eventually receive not just one but five PPDCGT forms for the client. As they cannot be photocopied for use for other clients this was not much help!
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Replying to Homeworker:
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By Justin Bryant
16th Sep 2020 12:42

But that's all just par for the course with HMRC and you just have to be persistent. The link below mentioned above is very good:
https://www.icaew.com/technical/tax/tax-faculty/taxguides/2020/taxguide-...

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By hiu612
16th Sep 2020 10:22

The headache I've found is that when you want to do this on behalf of a client they need to register their PTA and then register for 30 day CGT, enduring Neil's experience. Then give us the reference number, and we then send them a link to click (which itself is perverse - IT security which starts with an e mailed link which you click on and then enter your credentials) so as to authorise us. I reckon about 50% the cost of one of these returns is talking the client through that process and getting the authority in place. As Neil says, the interface once you're in is surprisingly workable.

What is really called for is an API alternative so we can file through our existing tax return software, pre-populating the following year's tax return as we go.

Seems HMRC's policy of agents able to do whatever taxpayers can do as a matter of course continues to be an ambition and not a reality.

Still better than the TRS update service though. . .

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By cfield
16th Sep 2020 10:29

Good post Neil, but googling "CGT property return" or something of that ilk is what most people would have done to start with, and that would have brought up the HMRC link, so not exactly a brainwave. Not of Einstein proportions anyway.

They have made this whole process unnecessarily complicated though, especially compared to the non-resident CGT returns we've had to do for the last few years. They are a doddle by comparison. No need for logins or authorisations, and the sky never fell in. Why couldn't they have just extended that to UK residents? Too simple I suppose. Or maybe it offended the great god Privacy.

It's also worth mentioning that if you do one of these returns for a client you need an agent services account. The MTD one for VAT will do. Then you need to get them to click the link authorising you. Not too difficult when you know how, but all a bit unnecessary and bureaucratic in my view.

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By farhan413
16th Sep 2020 11:33

Question re letting relief, If a buy to let property was sold after 6 April 2020 and it was purchased say 20 years ago, is the £40,000 letting relief apportioned for period of ownership or it is completely abolished?

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Replying to farhan413:
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By Homeworker
16th Sep 2020 12:00

It's gone completely!

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