Insights

Autumn Budget 2021: Capital Taxes

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  • Published: Wed, 27 Oct 2021 19:12 GMT

Despite speculation that this Budget could include significant changes to CGT or IHT, announcements to capital taxes were minimal. The sole change, a longer deadline for CGT reporting and payment on property disposals, was recommended by the Office of Tax Simplification (OTS) in May 2021 and is a welcome easement. The OTS also recommended much more extensive reforms to both the CGT and IHT regimes. The Treasury has been under significant strain and is unlikely to have had the opportunity to consider these recommendations, but reform cannot be ruled out in the future.

Extension of deadline for reporting and paying tax on property disposals

The deadline for reporting specific property disposals, and for paying tax on any gain arising, will be extended from 30 days after completion to 60 days.

Rules were introduced in April 2015 that require non-UK residents making disposals of UK residential property to report the disposal on a special CGT return. An on-account tax payment of any CGT is also due within 30 days of completion of the disposal.

Summary

The reporting regime was extended for non-UK residents from April 2019 to include commercial property, as well as indirect disposals, where the disposal is of a ‘property-rich’ company. It was extended further from April 2020 to include disposals of UK residential property by UK residents, but only where a gain is realised. The requirements apply to disposals by individuals, trustees or personal representatives of deceased individuals.

The deadline for filing the CGT return and paying any tax due will now be extended to 60 days from the date of completion.

Our comment

The 30-day deadline for filing property CGT returns has proved problematic, especially for individuals who do not have professional advisers or do not have a detailed knowledge of the UK tax system. In May 2021, the Office of Tax Simplification recommended that the deadline be extended to 60 days from completion, so the adoption of this measure will be welcomed by both taxpayers and advisers.

While the complexities inherent in a system requiring an on-account tax payment before the end of a tax year will not be resolved by the change, the increase in the deadline will at least allow taxpayers more time to estimate their tax liabilities accurately and comply with the registration and filing requirements, meaning that fewer will become liable to late filing penalties.

When will it apply?

For completion dates on or after 27 October 2021

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