Earlier on this year almost 20% of taxpayers with gains to declare from UK residential properties failed to report and pay the capital gains tax on time.
The CGT 30-day reporting and payment system came into effect on 6 April 2020, right in the middle of the pandemic and without much publicity from HMRC.
Although late filing penalties for missing the 30-day deadline were waived for the first three months, and the filing period was doubled to 60 days with effect from 27 October 2021, the number of taxpayers who missed the deadline grew.
A freedom of information request submitted to HM Revenue & Customs by the Financial Times showed that 26,500 returns missed the filing deadline in the 2021-22 tax year, this is 1,200 more than the previous year.
The CGT reporting system that was introduced has led to double the reporting effort required by the taxpayer and their agent, as well as doubling the risk of a late filing penalty, this is because taxpayers have to report gains in their UK Property return, as well as their self assessment return, and if done in the wrong order could be subject to penalties. So what are the costs? The penalties due for a late UK property return are imposed on the same structure as applies for a SA return:
1 day late: £100
Over 3 months late: £10 per day up to 90 days
Over 6 months late: greater of £300 and 5% of tax due
Over 12 months late: greater of £300 and 5% of tax due.
If you have any questions, please get in touch.