Time to change the 30-day deadline for Capital Gains Tax

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From April 2020 onwards, the Capital Gains Tax (CGT) due on residential property sales has had to be reported and paid within just 30 days. AAT argues it’s time that changed.

As most readers will know, how and when you report CGT over your annual allowance (currently £12,300) depends on what you made the gain on.

Since April 2020, those with a reportable gain on UK residential property must report and pay any tax due using a Capital Gains Tax on UK property account within just 30 days of selling it.

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Previously, gains could be reported in a self-assessment tax return in the tax year after the property was sold.

The rationale

This was quite a radical change from the previous requirement but is perhaps understandable given the change was estimated to have netted the Exchequer almost £1bn in increased revenue in its first year of operation. Furthermore, it has been forecast to increase revenue by approximately £100m every year thereafter.

The reality

Since this change came into effect last year, AAT has repeatedly highlighted its members’ concerns, particularly AAT Licensed accountants, with the unreasonable nature of this new 30-day reporting requirement.

The process is reliant on clients setting up a CGT account online (which can take at least two weeks) within 30 days. Agents are not able to do this for their clients, which means this deadline is often missed.

A number of members and our own AAT Tax Panel of senior tax professionals have also raised concerns about the additionally challenging nature of the short 30-day timeframe over the Christmas period and throughout the pandemic period of repeated lockdowns and tier measures.

There is little doubt that estate agents could do more to highlight this requirement to sellers too. The CGT account can be set up before a sale is concluded and advice given long before this date is reached but this rarely happens in practice.

The solution

AAT is now working with HMRC, and other professional bodies, to improve guidance in this area.

However, as we have often said over the last 18 months, we remain convinced that many of the problems associated with this reporting change would be solved by simply doubling the reporting period from 30 days to 60 days.

This would still secure increased revenue compared to the previous reporting requirement (to report gains in a Self-Assessment tax return in the following tax year), which had been in force for many years.

Doubling the period to 60 days would better reflect the need to reduce frequently encountered challenges for agents and their clients as well as the unrepresented.

AAT believes 60 days would therefore strike a more realistic balance between these two competing interests.

Next steps

There appears to be an increasing momentum for change as a number of influential individuals and organisations are now making the same recommendation. Perhaps most notably, in May 2021, this included the Office for Tax Simplification who called for an increase to 60 days as part of its second report into CGT, “Simplifying practical, technical and administrative issues”.

AAT will be raising the issue with the Financial Secretary to the Treasury, Jesse Norman MP, next month and will continue to press for reform wherever possible.

Phil Hall is AAT's Head of Public Affairs and Public Policy.

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