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Capital gains - declare?

Practical Issues
Adamski
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Capital gains - declare?

#442170

Postby Adamski » September 14th, 2021, 2:04 pm

Hi All, I've got some CGT to pay c£3k as sold amount over the gains threshold from unsheletered investments, for a house purchase.

I've never been asked to do a tax return as earnings under threshold and been careful with dividends and gains being sheltered previously.

Do I declare through my personal tax account and pay the tax now, request a tax return at the end of tax year, or do nothing and wait for hmrc to find out?

I've got the records, is there any risk with do nothing, and keeping the £3k aside?

Thanks, Adam

scrumpyjack
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Re: Capital gains - declare?

#442177

Postby scrumpyjack » September 14th, 2021, 2:10 pm

Adamski wrote:Hi All, I've got some CGT to pay c£3k as sold amount over the gains threshold from unsheletered investments, for a house purchase.

I've never been asked to do a tax return as earnings under threshold and been careful with dividends and gains being sheltered previously.

Do I declare through my personal tax account and pay the tax now, request a tax return at the end of tax year, or do nothing and wait for hmrc to find out?

I've got the records, is there any risk with do nothing, and keeping the £3k aside?

Thanks, Adam


You should complete a tax return for the relevant tax year. Assuming the disposal was in the 21/22 tax year, the return needs to be submitted, and tax paid, by 31/1/2023 (or a paper return submitted by 31/10/2022). As the CGT is re the sale of investments the tax does not need to be paid sooner.

Not submitting a return and paying the tax would be breaking the law, so no one on TLF could endorse that!

mc2fool
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Re: Capital gains - declare?

#442235

Postby mc2fool » September 14th, 2021, 4:38 pm

You can file for self assessment and put in a tax return if you want, but you do not need to, you can use the following online service instead.

"You can use the ‘real time’ Capital Gains Tax service immediately if you know what you owe.

You need to report your gain by 31 December in the tax year after you made the gain. For example, if you made a gain in the 2020 to 2021 tax year, you need to report it by 31 December 2021.

You’ll need a Government Gateway user ID and password. If you do not have a user ID, you can create one when you report and pay.

After you’ve reported your gains, HMRC will send you a letter or email giving you a payment reference number and telling you how to pay.
"

https://www.gov.uk/capital-gains-tax/report-and-pay-capital-gains-tax

daveh
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Re: Capital gains - declare?

#442257

Postby daveh » September 14th, 2021, 5:50 pm

mc2fool wrote:You can file for self assessment and put in a tax return if you want, but you do not need to, you can use the following online service instead.

"You can use the ‘real time’ Capital Gains Tax service immediately if you know what you owe.

You need to report your gain by 31 December in the tax year after you made the gain. For example, if you made a gain in the 2020 to 2021 tax year, you need to report it by 31 December 2021.

You’ll need a Government Gateway user ID and password. If you do not have a user ID, you can create one when you report and pay.

After you’ve reported your gains, HMRC will send you a letter or email giving you a payment reference number and telling you how to pay.
"

https://www.gov.uk/capital-gains-tax/report-and-pay-capital-gains-tax


I was in a similar situation to the OP and tried using the realtime CGT reporting service, but when I tried entering multiple transactions (ie capital gains from more than 1 sale of different shares) they refused to accept it and asked me to fill out a tax return. I'd been under the CGT limit until a forced capital gain appeared near the end of the year so the sales were spread over the year and I tried reporting them all at once using the realtime service. If the sale(s) were all at the same time its worth giving it a go, as it is pretty simple to do and all they'll do if it's not acceptable is ask you to fill out a tax return so you've nothing to lose by trying it.

Gengulphus
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Re: Capital gains - declare?

#442278

Postby Gengulphus » September 14th, 2021, 6:52 pm

mc2fool wrote:You can file for self assessment and put in a tax return if you want, but you do not need to, you can use the following online service instead.

"You can use the ‘real time’ Capital Gains Tax service immediately if you know what you owe.

You need to report your gain by 31 December in the tax year after you made the gain. For example, if you made a gain in the 2020 to 2021 tax year, you need to report it by 31 December 2021.

You’ll need a Government Gateway user ID and password. If you do not have a user ID, you can create one when you report and pay.

After you’ve reported your gains, HMRC will send you a letter or email giving you a payment reference number and telling you how to pay.
"

https://www.gov.uk/capital-gains-tax/report-and-pay-capital-gains-tax

That December 31st deadline would seem to have a bit of a trap in it, because there's an earlier October 5th deadline 6 months after the end of the tax year concerned for informing HMRC that you have CGT to pay if they haven't sent you a tax return, according to https://www.gov.uk/hmrc-internal-manual ... rk/salf210. So if you wait until after October 5th to use the ‘real time’ Capital Gains Tax service and then find it decides what you've done is too complex for it to accept, you're at least technically past the deadline...

Gengulphus

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Re: Capital gains - declare?

#442284

Postby Lootman » September 14th, 2021, 7:04 pm

Gengulphus wrote:
mc2fool wrote:You can file for self assessment and put in a tax return if you want, but you do not need to, you can use the following online service instead.

"You can use the ‘real time’ Capital Gains Tax service immediately if you know what you owe.

You need to report your gain by 31 December in the tax year after you made the gain. For example, if you made a gain in the 2020 to 2021 tax year, you need to report it by 31 December 2021.

You’ll need a Government Gateway user ID and password. If you do not have a user ID, you can create one when you report and pay.

After you’ve reported your gains, HMRC will send you a letter or email giving you a payment reference number and telling you how to pay.
"

https://www.gov.uk/capital-gains-tax/report-and-pay-capital-gains-tax

That December 31st deadline would seem to have a bit of a trap in it, because there's an earlier October 5th deadline 6 months after the end of the tax year concerned for informing HMRC that you have CGT to pay if they haven't sent you a tax return, according to https://www.gov.uk/hmrc-internal-manual ... rk/salf210.

So if you wait until after October 5th to use the ‘real time’ Capital Gains Tax service and then find it decides what you've done is too complex for it to accept, you're at least technically past the deadline...

The word "technically" there might be important. Like the OP I had always managed to keep my capital gains within the annual allowance and so successfully avoided doing SA returns until something like 17 years ago. At that point I started offloading some non-PPR properties and so there was no way to avoid CGT.

However I did not advise HMRC ahead of time that there was a CGT liability for the prior tax year in the way your reference suggests. Rather I just submitted a SA return within the usual January timeline, and there was no problem doing that.

Not that I am suggesting that people should wait until the last minute. And in fact I usually have my return done by June these days. Only that I suspect that HMRC may be so thrilled when people declare stuff that they would probably not otherwise know about, that they may overlook such technical infringements.

scrumpyjack
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Re: Capital gains - declare?

#442320

Postby scrumpyjack » September 14th, 2021, 8:55 pm

Per the HMRC manual if you miss the 6 month deadline for notifying that you have capital gains tax to pay, there is no penalty as long as you pay the tax by the deadline

"Penalties for failure to notify chargeability
Schedule 41 FA 2008

The taxpayer is liable to a financial penalty if notification is not made within the six-month time limit. The maximum penalty is the net amount of tax due, but unpaid, at 31 January following the tax year in which the liability arises.

This means that even if notification is made after the six-month time limit the penalty can be eliminated if the taxpayer pays the full amount of the tax due on or before 31 January. Where any penalties do arise they are assessed by HMRC in an amount not exceeding the tax unpaid."

So the answer to the original question about the possibility of not declaring. If HMRC subsequently find out you could have to pay the tax plus a 100% penalty.

Adamski
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Re: Capital gains - declare?

#442419

Postby Adamski » September 15th, 2021, 10:27 am

Thanks guys for advice, I've registered for self assessment, so going to do tax returns for 20-21 and 21-22.


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