30-day CGT rule on property and non-property disposals?

by Readers Question

13:51 PM, 14th December 2020
About 5 months ago

30-day CGT rule on property and non-property disposals?

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30-day CGT rule on property and non-property disposals?

I understand that disposal of a rental property must be reported and CGT paid within 30 days of the sale, but that reporting it is not required if there is no associated taxable gain. What I am not clear on is when a modest property profit combines with the profit on non-property disposal to exceed the capital gains allowance.

I will shortly complete on the sale of a rental property and will make a gain of around £9k, ie, within the CGT allowance. Earlier this year I sold stock market investments for a gain of £10k in round numbers. The combined gain is therefore subject to CGT above the allowance of £12,300.

So, do I report the property disposal and pay CGT now on the whole taxable gain, because it is the property sale that has taken me above the allowance? Or do I disregard the stock market disposal for the purposes of the 30-day rule, meaning that I wait and include both disposals in my regular tax return?

If it is the latter, what then if I were to sell a second rental property for a gain that is also below the annual allowance but when combined with the gain on the first property exceeds it? I’m assuming that I report the combined gain within 30 days of the second sale and trust that HMRC doesn’t levy a penalty for not reporting the first. And, what if someone sells a property for a within-allowance gain first and then a non-property asset more than 30 days later? Surely they shouldn’t be penalised for not foreseeing the future? Or, am I being naive?

I’m proactively withdrawing from letting property, but at this rate, I’ll be selling only one per year to avoid doing my head in!

If anyone can shed a light, many thanks.

Davey

HMRC >> https://www.gov.uk/government/news/get-ready-for-changes-to-capital-gains-tax-payment-for-uk-property-sales

When you need to report Capital Gains Tax within 30 days

If you live in the UK, you may need report and pay Capital Gains Tax when, for example, you sell or otherwise dispose of:

  • a property that you’ve not used as your main home
  • a holiday home
  • a property which you let out for people to live in
  • a property that you’ve inherited and have not used as your main home

But you won’t have to make a report and make a payment when:

  • a legally binding contract for the sale was made before 6 April 2020
  • you meet the criteria for full Private Residence Relief
  • the sale or disposal was made to a spouse or civil partner
  • the gains (including any other chargeable residential property gains in the same tax year) are within your tax free allowance (called the Annual Exempt Amount)
  • you sold the property for a loss
  • the property is outside the UK

Comments

TrevL

17:44 PM, 14th December 2020
About 5 months ago

The .gov website says that you have to report the disposal of the property within 30 days irrespective of whether you have any tax to pay.....so the shares sale and allowance is irrelevant, you still have to report the sale of the property.

Lomondhomes

19:32 PM, 14th December 2020
About 5 months ago

Can I offset losses by selling ie. shares within that 30 day period?

Olls63

20:36 PM, 14th December 2020
About 5 months ago

The HMRC press release states that there is no need to report a gain on the sale of a residential property if there is no tax to pay.
However as you have already made a gain on shares, and following the logic of the actual online process (where you can claim losses you have from the current year), when you get to the "how much of the annual exemption do you want to use" section you would have to enter £3,300 (being your balance left after the share gain).
To my mind you would have to report the gain and pay the tax.

Olls63

20:39 PM, 14th December 2020
About 5 months ago

Reply to the comment left by Lomondhomes at 14/12/2020 - 19:32
The online process asks this question:
"Do you want to include any other Capital Gains Tax losses made in tax year 2020 to 2021?"
It doesn't say you can only include one's made prior to the property sale, so I would say yes you can offset losses made within the 30 day period.

Lomondhomes

20:41 PM, 14th December 2020
About 5 months ago

Reply to the comment left by Olls63 at 14/12/2020 - 20:39
Thanks Olls63

Anne Collins

21:37 PM, 14th December 2020
About 5 months ago

Having been through a similar situation, I would report the sale and claim the amount of CGT personal allowance equal to any gain just to cover yourself. You have to report it all again on your annual tax return anyway so all gains/losses for the whole tax year will be recalculated at that point. HMRC will either request any further CGT or make a refund depending on the final CGT calculation for all disposals in the tax year.


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