How and when you report the capital gains depends on the type of gain you have made.
Each time you sell something on which you are liable to pay Capital Gains Tax you have to report it to HMRC. There are different reporting rules in the following situations:
- If you have sold the property in the UK on or after 27 Oct 2021
- If you sold the property and the completion date was 6 April 2020 and 26 Oct 2021.
- If you sold some other assets such as personal possessions such as jewellery , antiques provided they are £ 6000 or more, shares which you are supposed to pay capital gains tax. You do not pay capital gains tax if you sold your car unless you used it for the business.
If you sold the property in the UK on or after 27 Oct 2021.
You will have to report and pay any tax due on the UK property within 60 days if the completion was on or after 27 Oct 2021.
This means you should report it by 31 Dec 2021. If you don't do this on time you will get a penalty from HMRC.
If you sold the property between 6 April 2020 and 26 Oct 2021.
You will have to report and pay any capital gains tax within 30 days if the property was sold between 6 April 2020 and 26 Oct 2021.
Where to report and pay?
You will have to report and pay by creating Capital Gains Tax on the UK property account. You will need your government gateway user ID and password. If you don't have one you can create one. You can pay by using real time Capital Gains Tax Service.
The property that you sold should not be your personal property it can be either of the following:
- But to let property
- Business premises
- Land
- Inherited property
Make sure that you have proper records
You should keep proper records such as receipts, bills and invoices. You might want to include the following bills :
- The cost that you paid for the asset when you bought it.
- Any additional costs that you paid for example professional advice when you were selling the asset such as the lawyer fees etc.
- Receipts showing the stamp duty you paid when selling the asset.
- Any other costs that you invested in the property to do some improvements which might have increased its market value.
- You should keep copies of any valuations
- The contracts for buying and selling the property.
How will you work out your gain?
You will add all the gains from the property, deduct any costs such as cost of buying the property, stamp duty costs, any fees paid to the professionals such as solicitors, costs of any extensions done on the property.
Once you will get the gain you have to work out if you are eligible for any reliefs such as incorporation relief, private residence relief , entrepreneurs relief, incorporation relief, gift roll over relief.
For capital gains tax rates click here.
If you sold any other asset as mentioned above, you will be reporting it to HMRC by 31 Dec . For example if you made a gain by selling a personal possession worth more than £6000 or shares and it falls within the tax year 2021/ 2022 you should report it by 31 Dec 2021. You can also report it in the self assessment tax return if there is another reason that you will be sending in the tax return.
We at Taxaccolega, Property accountants based in Croydon can help you if you have a property business and you deal in buy to let property or you have business assets which you are interested in selling. If you need help with your self assessments do not hesitate to call us at 020 8127 0728 and our team of accountants will be happy to help you.