30-day CGT rule on property and non-property disposals?Make Text Bigger
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.
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
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