Late Filing Penalty for Capital Gains Tax

In the 2nd half of 2020, HMRC sent out 13,113 late filing penalty charges, asking for undeclared capital gains amounts from second property owners and landlords across the United Kingdom.

Since 6th April 2020, whereby Capital Gains Tax (CGT) is due on the disposal of a UK residential property, the due date for filing a return and paying the tax is limited to 30 days away from the date of completion of the sale.

This adjusts the due dates for UK taxpayers with the deadlines which are currently in place for non-UK homeowners, despite the fact that non-UK residents are expected to send a return irrespective of there is any tax due.

HMRC at first foregoes its £100 late filing penalties for late capital gains tax returns until 30th June 2020, so long as any tax due was paid by 31st July 2020.

After August 2020, late filing charges have been widespread amongst the many landlords and second homeowners who have missed out on the 30-day deadline to submit their capital gains return on UK property.

An HMRC representative said: “Switching people closer to real-time transactions will help ensure that they still have funds readily available to settle their CGT financial obligation. We do not want to accumulate penalty charges; just support taxpayers get their tax right. Consequently, we took a soft approach to penalty charges, to help people get familiar independently with the improvement in the guidelines, and did not send out late filing penalties for CGT payment on account returns.”

Prior to the new guidelines, people could file for any gains and consequent capital gains tax by the end of the tax year in their self-assessment tax returns. In some instances, this tended to give individuals over 12 months well before they had to disclose and settle their CGT bills.

Any person confronted with a late filing penalty for capital gains can send an appeal to HMRC so long as they have a ‘reasonable excuse’ for skipping the 30-day reporting timeline actually. HMRC has affirmed it will acknowledge Covid-19 as a sensible justification in these situations.

Reporting and laws for capital gains tax stay a specialized area. With a plethora of reporting and payment due dates, as well as possible reliefs and exceptions that could lead to significant cost savings, it is very crucial that you look for expert assistance when calculating your capital gains tax.

To setup, a free initial appointment about your capital gains tax matter, get in touch with our helpful and expert Tax Accountant today on 0800 135 7323. Additionally, you can drop us a line using our online inquiry form or book an appointment online.