Is Capital Gains Tax going to change?

The UK's Capital Gains Tax (CGT) regime is being looked at by the Treasury as a possible way to recoup some of the cash it has been handing out in Covid-19 financial support.

With over £200bn having already been spent this year on support, the Treasury will be eager to have some money flowing back into its coffers in future.

The Office of Tax Simplification (OTS) is reviewing CGT and how it works in practice for taxing individuals and small businesses.

On the pretext of seeing how the regime could be made simpler, the OTS will review how the CGT regime can help to meet the government's policies.

Anyone can contribute to the review with their comments, and you have until 10 August to make comments on CGT principles and until 12 October for comments on its operation.

The review and comments will likely cover the rates of tax, the many exemptions and allowances available and the use of losses. It will also examine property sales and the use of clearance procedures.

This review will include the private residence relief that individuals enjoy on their own homes. Some campaigners have called for this to be less generous in future.

Another area that could see change is an alignment of the rates of CGT with income tax, which would increase the amount of tax collected and affect valuable reliefs such as Entrepreneurs Relief and Enterprise Management Incentive schemes.

31 July deadline for reporting property sales

New CGT rules mean that disposals of UK residential property made by UK residents must be reported to HMRC by 31 July 2020 to avoid a penalty.

Since 6 April 2020 there has been a new requirement to report and pay CGT on disposals of UK residential property within 30 days of completion made by UK resident taxpayers.

But due to coronavirus the deadline was extended for UK resident taxpayers only so that there was no late filing penalty for any transactions completed between 6 April 2020 and 1 July 2020, as long as they are reported by 31 July 2020. (Non-residents continue to have to file within 30 days of completion.)

Transactions completed from 1 July 2020 will receive a late filing penalty if they are not reported within 30 calendar days.

However, interest will be charged if the tax remains unpaid after 30 days for all transactions from 6 April 2020.

UK residents only have to report gains on UK residential property if tax is due.