New 30 day CGT reporting and split commercial/residential property?
Can anyone clarify the new rules? UK residents must now declare any Capital Gains due on a residential property within 30 days of completion.
According to the HMRC website, the rules do not apply to Commercial property. My solicitor has said that if any part of a property is rated Commercial then the whole property is deemed Commercial.
It would need a Commercial EPC for example and be subject to Business Rates (both apply to my property). I have just sold a commercial premises consisting of a shop and flat over. The flat can only be accessed via the shop and doesn’t have a separate entrance.
However, on checking with HMRC, they have said that such a property needs to be split and valued separately for CGT purposes, even though the property was purchased as a single unit originally and sold as one unit. This now involves extra cost and additional valuations.
Has anyone else experienced this situation and how did they deal with it?
Anne
Editor Notes:
REMINDER – CGT rules are changing in April 2020 >> https://www.property118.com/reminder-cgt-rules-are-changing-in-april-2020/
From HMRC >>
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
Have Your Say
Every day, landlords who want to influence policy and share real-world experience add their voice here. Your perspective helps keep the debate balanced.
Not a member yet? Join In Seconds
Login with
Previous Article
Guidance to help prevent care leavers becoming homelessNext Article
Are These Auction Property Deals Worth it?
Member Since January 2020 - Comments: 102
1:35 PM, 28th October 2020, About 5 years ago
Surely you would be getting the valuations anyway; In order to calculate how much was taxed at the residential rate of 18/28% and how much was taxed at the ordinary rate of 10/20%.
Similarly if you wanted to claim Business Asset Disposal Relief you would need to apply some form of apportionment.
Member Since December 2014 - Comments: 50
12:18 AM, 29th October 2020, About 5 years ago
What are the consequences if the CG Tax return is later than 30 days.
Member Since January 2020 - Comments: 102
12:36 PM, 29th October 2020, About 5 years ago
Where the return is not filed within 30 days of the completion date an automatic late filing penalty of £100 will apply. If the return is more than three months late, daily penalties of £10 a day can apply and then fixed £300 penalties at 6 months and 9 months, in the same fashion as apply for late self-assessment returns.
Member Since July 2013 - Comments: 305
12:40 PM, 29th October 2020, About 5 years ago
I sold a property at a loss a couple of months ago and hoping to complete the sale of another one at a profit shortly.
Presumably I can declare them both at the same time to reduce CGT?
Member Since January 2020 - Comments: 102
1:23 PM, 29th October 2020, About 5 years ago
You will have to do 2 reports, you can only report more than 1 disposal at a time if they both had the same completion date.
As the 1st disposal was a loss you don’t have to use the online facility, you can claim the loss relief in Part 3 of the online process.
Member Since July 2013 - Comments: 305
2:51 PM, 29th October 2020, About 5 years ago
Reply to the comment left by Olls63 at 29/10/2020 – 13:23
Thanks Olls
Member Since December 2014 - Comments: 50
12:40 AM, 31st October 2020, About 5 years ago
Reply to the comment left by Olls63 at 29/10/2020 – 12:36
Thanks.
Member Since June 2017 - Comments: 2
3:48 PM, 7th December 2020, About 5 years ago
Having been through the 30 day CGT declaration process and lots of discussions with HMRC, I can now confirm that if you have a mixed commercial/residential premises e.g. a shop with a flat over, and it was let out so no business relief could be claimed, then you apportion the proceeds (and purchase price) between residential and commercial. You declare and pay any CGT on the residential element within 30 days. The commercial element of the sale is treated as a separate transaction and is only declared when you do your tax return for the year. Any CGT is then calculated as part of your normal annual tax assessment at that point. It is bizarre to have to report CGT in 2 stages on the same property disposal, but up to 21 months apart! But I hope this helps others faced with a similar situation.
Member Since November 2023 - Comments: 1
10:03 PM, 1st November 2023, About 2 years ago
Reply to the comment left by Anne Collins at 07/12/2020 – 15:48
Hi Anne, very useful information. My accountant was misleading me to think I have to declare this on my tax return and not within the 60 days.
My shop also has a small flat above with entrance only through the shop and toilet bathroom on ground floor level at the back of the shop.
Can I ask did you do the valuation yourself of the split? Seems its a struggle to find a back dated valuation/retrospective valuation for both residential and commercial my was gifted to me as one transaction on 2008 and was sold in sept 2023.
Surveyors has said that there was no a separate lease so they wouldn’t be able to value each separately.
Would appreciate any feedback from you on your opinion/experience on this and I know its been nearly 3 years since the last post on this topic but was hoping you or someone else maybe able to share any details in order to help me and others who would reach this page being in the same position.
Thank you