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Investment Property – Capital Gains Tax

28th June 2021

investment landlords capital gains tax update

Sale of Residential Investments


Any investment landlords that are offloading properties for sale since last year have had to follow the new Capital Gains Tax rules whereby sellers need to pay CGT liability within 30 days of the completion taking place. HMRC has announced that 13,113 people in the last six months of last year had fines issued to them totalling over £1.3M to those who had missed the new deadlines.


Last April, the CGT changed which meant that all UK residents including, individuals, trustees and personal representatives who gift or sell UK residential property must calculate, report and pay an estimate of the CGT liability within 30 days of the date of completion.


The change of ‘in-year’ reporting, instead of ‘end of tax year via self assessment’ reporting means CGT has to be based on estimated calculations. The only exemption for this is if there is a residential property being sold which falls under the threshold (e.g. because the private residence relief covers the gain). These changes have primarily affected landlords and second homeowners


Since the reopening of the housing market in May 2020, with viewings and moving home being able to continue throughout the lockdowns, the housing market has rebounded vibrantly. In addition, with the attraction of the Land Transaction/Stamp Duty holiday (shortly coming to an end) combined with the changing lifestyles post-pandemic, most areas of the UK have experienced high volumes of transactions in residential property. Therefore it is crucial that sellers are aware of these changes and make the appropriate plans to comply with the rules.


Sellers will need to contact their financial advisors early enough to be able to calculate the appropriate estimate for Capital Gains Tax, alongside their HMRC report. This is a huge change since tackling tax on a yearly basis and whilst HMRC did allow a ‘penalty-free’ period this was only applicable for the first three months of the 2020/2021 tax year. Sellers who missed the deadline after that time would have been liable to a £100 fine and any interest on late payment of CGT.


How to pay Capital Gains Tax since the changes?


A report can be made online using the new UK Property Reporting Service, where all those taxpayers who want to appoint an agent to handle the reporting need to set up a ‘Property Account’. This is all accessible through the Government Gateway and confirming your identity that way. Once this has been completed you will get a username and password so you can access your ‘Property Account’.


To be clear, the UK Property Reporting Service is a stand-alone service and is not part of the online Personal Tax Account (PTA). The reporting service is accessible to anyone who has set up a Government Gateway to access their PTA and will be able to use the same login credentials on those pages to set up a Property Account.


If you are looking for assistance with your property portfolio and require asset management for your investment. Please don’t hesitate to contact us.