Last year, we outlined the new 30-day Capital Gains Tax (CGT) deadline that came into effect in April 2020. However, many unsuspecting taxpayers are continuing to be caught out by this obscure and, quite frankly, unreasonable deadline.
We’re here to remind you of the current deadline and its penalties, as well as update you on some promising prospects that could see the deadline extended in the future.
What Is The 30-day CGT Deadline?
In short, you’re required to pay CGT if you sell an asset that has increased in value. This might be a second home or shares etc. (Find out more about CGT here.)
This tax was previously collected through your Self Assessment Tax Return at the end of the tax year. However, in April 2020, HMRC introduced a new 30-day deadline. So for example, if you’re selling a second residential property, you have 30 days from the completion of your house sale to work out, file and pay your bill, otherwise you’ll face substantial penalties.
This is proving to be very tricky for several reasons:
- Many taxpayers are completely unaware of this amended deadline (and continue to be until they file their Self Assessment Tax Return and are hit with a hefty fine!) so raising awareness is key.
- Some estate agents and solicitors don’t mention this deadline to their customers, again meaning people are completely unaware.
- House sales are rarely straight forward and can take a long time to complete. In addition, it can take two weeks to set up your CGT account, making it very difficult to pay your tax before the deadline.
In the words of Phil Hall, the head of public affairs and policy at the Association of Accounting Technicians (AAT): “it’s practically impossible!”
Mr Hall has offered some great advice, though. He’s stated that you don’t need to wait until your sale has completed; you can get your account set up beforehand. Therefore, it’s worth getting in touch with your accountant as soon as you plan to put your house on the market. You can read more about what Phil Hall had to say during his interview with FTAdvisor here.
Industry Leaders Calling For Deadline To Be Doubled
There is hope! Industry leaders are calling for the deadline to be doubled (at the very least) to 60 days. In a report published by the Office of Tax Simplification (OTS), they’re asking the government to consider extending this deadline and/or making it compulsory for estate agents and solicitors to provide information of the deadline to their customers in order to help increase awareness. The AAT is also in talks with HMRC, asking for a similar extension.
Whilst this is very promising news, we need to stay mindful of the current 30-day deadline and continue to raise awareness. If you’re in a situation where you think you’ll need to pay CGT, please get in touch with one of our accountants as soon as possible so they can advise and guide you through the process. We will of course keep you informed of any further updates to this deadline.