There are certain points that one should keep in mind while preparing CGT return, especially if this is your first disposal in any fiscal year. 

First Property Disposal

If you are preparing CGT for the first disposal in any fiscal year, then you can apply for the tax exemptions known as annual exemption (£12,300 for the tax year 2020-21) against chargeable gains.

Bring Forward Capital Losses

To reduce the gain or to touch the threshold of tax-free allowance, you can inform HM Revenue & Customs (HMRC) about the capital losses on the chargeable asset sheet arising in the current year. Doing so will get the losses to be subtracted from the gains that you’ve made in the ongoing tax year. 

If your taxable income still surpasses your tax-free allowance, you can bring forward unused capital losses incurred in the previous tax years. If these unused capital losses bring your gains equal to or below the tax-free allowance threshold, you can use the remaining in the next tax year for the same purpose. 

For claiming the tax relief on capital losses, you’ve to mention them on your tax returns. 

CGT Payment

  1. Resident Taxpayer: If you are a resident taxpayer and have disposed of the asset after the 6th of April-2020, then you are bound to report HMRC about the disposal and pay the CGT due within 30 days of conveyance. 

If you fail to do so within 30 days, you’ll have to pay both penalties and interest. To pay CGT, you are required to have a government gateway comprising ID and password. If you do not have a government gateway, you’ll get one at the time of reporting of disposal and payment of CGT. 

Read Also: Changes in CGT Regime for UK Resident Taxpayers (Insert link here)

Likewise, if you’ve disposed of the asset before the 6th of April-2020, you’ll report the gain via “Real-Time Capital Gains Tax Service” on your self-assessment tax return. 

  1. Non-Resident Taxpayer: If you are a non-resident taxpayer in the UK and dispose of an asset, you’ll report and pay the tax due within 30 days. Even if there is no tax due, you’ll still report to HMRC about the disposal. 

When you complete and submit CGT return, HMRC issues you a record number against which you make the tax payment. HMRC then links this payment to your self-assessment record.  

How to make changes in your submitted report?

When you inform or report HMRC about your gains, HMRC forwards a payment reference number to you through either an E-mail or a letter. HMRC will also inform you about different ways of paying CGT. 

Read Also: Changes in CGT Regime for Non-Resident Taxpayers

If you’ve made an error while preparing the CGT return and want to make changes in the report, you’ll use the report reference number that starts with RTT. The report number is forwarded to you by HMRC after ten days of submission of your report. After this, HMRC informs you about the tax that you are required to pay. HMRC will also set the deadline regarding the payment of CGT.

All this is a bit complicated? Isn’t it? Or shall we say a lot complicated for a layman!

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