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Review of CGT on the cards?

The Chancellor, Rishi Sunak has written to the OTS (Office of Tax Simplification), asking the OTS to undertake a review of Capital Gains Tax (CGT) and aspects of the taxation of chargeable gains in relation to individuals and smaller businesses. In response to the request, the OTS has published a scoping document for the review, together with a call for evidence and an online survey.

The scope of review will include looking at the following areas: the overall scope of the tax and the various rates which can apply; the reliefs, exemptions and allowances which can apply, and the treatment of losses; the annual exempt amount and its interactions with other reliefs; the position of individuals, partnerships and estates in administration, and of unincorporated businesses and stand-alone owner-managed trading or investment companies; and interactions with other parts of the tax system such as Income Tax, Capital Allowances, Stamp Taxes and Inheritance Tax, including potentially different definitions for similar transactions/events.

The review will also consider a number of more specific issues, including clearance and claims procedures; chargeable gains on shares and securities; the acquisition and disposal of property; the practical operation of principal private residence relief; consideration of the issues arising from the boundary between Income Tax and Capital Gains Tax in relation to employees; valuations, record-keeping, calculating any tax payable and making returns, including claiming losses and the information HMRC have and can use to help them reduce administrative burdens, improve customer experience and ensure compliance.

The OTS are inviting response on the principles of CGT by 10 August 2020, and on the main section of the call for evidence by 12 October 2020. 

Source: Other Wed, 22 Jul 2020 05:00:00 +0100

Reporting Capital Gains on residential property

The Capital Gains Tax (CGT) reporting and payment date for UK residents that sell a residential property changed from 6 April 2020. This change means that any CGT due on the sale of a residential property needs to be reported and a payment on account of any CGT due made within 30 days of the completion of the transaction.

In practice, this change will only apply to the sale of any residential property that does not qualify for Private Residence Relief (PRR). The PRR relief applies to qualifying residential property used wholly as a main family residence.

HMRC has listed the following types of property sales that are affected:

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

This new reporting requirement does not apply to sales of your home if the private residence relief was available for the period of your occupation. There can be penalties and interest if any CGT due is paid late. Note, the payment date for any CGT due on residential property sales made in the year before 6 April 2020 will be 31 January 2021.

There were also changes to the PRR rules which saw the final exempt period for CGT purposes being reduced from 18 months to 9 months – from 6 April 2020. This relief applies even if the homeowner was not living in the property when it was sold. The time period can be extended to 36 months under certain limited circumstances.

Source: HM Revenue & Customs Wed, 01 Jul 2020 05:00:00 +0100

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