Capital Gains Tax payments on property disposal time limit extension
Published 27 October 2021
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Who is likely to be affected
Individuals, trustees and personal representatives of deceased persons who sell or otherwise dispose of interests in UK land.
General description of the measure
This measure extends from 30 days to 60 days the time limit for making Capital Gains Tax (CGT) returns and associated payments on account when disposing of UK land and property.
This measure also clarifies the rules for mixed use properties, which applies to UK residents only.
Policy objective
This measure allows taxpayers more time to produce and provide accurate figures, particularly in the more complex cases, as well as sufficient time to engage with advisers.
Background to the measure
UK residents that dispose of an interest in UK residential property that results in CGT to pay are required to deliver a CGT return to HMRC and make a payment on account of CGT within 30 days of the completion of the disposal.
Non-UK residents are required to deliver similar returns in respect of any direct or indirect disposal of UK land, irrespective of whether tax is due or the type of property, and make payments on account of CGT (where due).
In May 2021 the Office of Tax Simplification made recommendations on CGT including that the government should consider extending the 30-day deadline to 60 days.
This measure was announced at Autumn Budget 2021.
Detailed proposal
Operative date
This measure will have effect for disposals that complete on or after 27 October 2021.
Current law
Current law is contained in Schedule 2 to the Finance Act 2019.
Proposed revisions
Legislation will be introduced in Finance Bill 2021-22 to amend paragraph 3 (obligation to deliver a return to HMRC) and paragraph 7 (calculation of an amount of CGT notionally chargeable) of Schedule 2 to the Finance Act 2019.
The clauses:
- extend the return delivery and payment date to 60 days following completion of the relevant disposal; and
- for UK residents, clarify that where a gain arises in relation to a mixed-use property that only the portion of the gain that is the residential property gain is to be reported and paid.
Summary of impacts
Exchequer impact (£m)
| 2021 to 2022 | 2022 to 2023 | 2023 to 2024 | 2024 to 2025 | 2025 to 2026 | 2026 to 2027 |
|---|---|---|---|---|---|
| -60 | -5 | -5 | -5 | -5 | -5 |
These figures are set out in Table 5.1 of Autumn Budget 2021 and have been certified by the Office for Budget Responsibility. More details can be found in the policy costings document published alongside Autumn Budget 2021.
Economic impact
This measure is not expected to have any significant macroeconomic impacts.
The terms used in this section are defined in line with the Office for Budget Responsibility’s indirect effects process. This will apply where, for example, a measure affects inflation or growth. You can request further details regarding this measure at the email address listed below.
Impact on individuals, households and families
This measure is expected to impact each year on an estimated 75,000 individuals, trustees and personal representatives of deceased persons who sell or otherwise dispose of UK land. UK residents would be impacted if they dispose of property that is or was a residential property during their ownership and on which chargeable gains arise, such as a second home or rental property. Non-residents would be impacted if they dispose of any form of UK land.
Customer experience could see an improvement given the additional time taxpayers will have to deliver returns and pay any tax due.
This measure is not expected to impact on family formation, stability or breakdown.
Equalities impacts
Older persons are expected to be impacted more than young persons as they are more likely to dispose of property relevant to this measure.
It is not anticipated that there will be impacts on other groups with protected characteristics.
Impact on business including civil society organisations
This measure is expected to have a negligible impact on advisors. One-off costs will include familiarisation with the new rules and could include upskilling or training staff on new rules. There are not expected to be any continuing costs. Customer experience is expected to remain broadly the same as this measure does not alter how advisors interact with HMRC. There is expected to be no impact on civil society organisations.
Operational impact (£m) (HMRC or other)
Overall, we expect this change will reduce contact from taxpayers as HMRC will have less contact regarding the lack of time when completing a Payment on Property Disposal return.
HMRC will need to make changes to IT systems to support delivery of this measure and there will be a resource impact to support customers through transition. These changes are expected to cost in the region of £370k plus any associated resource implications.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
The measure will be monitored through information collected by tax returns and feedback from stakeholder groups.
Further advice
If you have any questions about this change, please contact the Capital Gains Tax policy team on Telephone: 03000 510915 or email: cgtbudget@hmrc.gov.uk.