Press release: Risk to taxpayers in changes to CGT payments, says tax body

In today's Autumn Statement, Chancellor George Osborne announced that from April 2019, CGT due on the disposal of any residential property will need to be paid within 30 days of completion.

A similar procedure was introduced in April this year which requires non-UK residents who dispose of UK residential property to compete a return within 30 days of completion and also pay the CGT due if they are not already required to complete an annual self-assessment tax return.

George Osborne also announced today that this change in payment rules would coincide with the roll-out of digital tax accounts to all, meaning the process of reporting and payment ought to be streamlined. However, the ATT has raised concerns about the off-set of capital losses.

Michael Steed, President of the ATT, said:

"As a tax body we are concerned that, without some form of end-of-year reconciliation, a taxpayer would lose the ability to claim capital loss relief in the best way open to them as the disposal of a residential property will be considered in isolation as and when it occurs.

"We note that the payment of CGT under the new rules is described in the Blue Book (1) as a payment on account, so we are hopeful that HMRC recognise the need for some form of end-of-year reconciliation, but this does in effect mean that the disposal is being reported twice in order to ensure the correct amount of CGT is paid - not quite the one-touch process the digital tax accounts are meant to represent."

Michael Steed added:

"It is important to remember that currently a CGT computation is drawn up at the end of a tax year when the position for all gains and losses in the year are known. In-year losses and losses brought forward from earlier years can both be off-set against gains, before the tax payable is calculated, in a way that best suits the taxpayer. For example if there are gains assessable at the 10 per cent rate due to entrepreneurs' relief being available and gains assessable at the usual rates of 18 per cent /28 per cent then a taxpayer can choose to off-set their losses (in year or brought forward) firstly against the gains chargeable at the higher rates of 18 per cent /28 per cent.

"ATT's Technical Team look forward to reviewing the draft legislation on this, which is promised for next year, and providing input on behalf of our members."

Notes for editors

1. Link to Autumn Statement Blue Book here