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OTS proposes doubling CGT payment deadline to 60 days

  • 21/05/2021
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OTS proposes doubling CGT payment deadline to 60 days
The Office of Tax Simplification (OTS) has proposed extending the deadline for paying Capital Gains Tax (CGT) on residential property disposals, including in the case of couples splitting up.


The proposal was one of 14 recommendations in the OTS’s second report on CGT, a review of which was requested by the Chancellor in July 2020.

The report proposed lengthening the payment deadline for paying CGT on disposal of a residential property to 60 days, up from the current 30. 

Paresh Raja, chief executive of bridging lender Market Financial Solutions, welcomed the idea. “It’s no surprise that a third of buy-to-let investors and other property sellers miss the 30-day CGT deadline, which for many is just too restricted,” Raja said.

“At a time when appetite among buyers remains strong, ongoing delays in conveyancing can make it a real challenge to file on time, through no fault of the individual’s, particularly if they own several properties.

“We expect this proposed reform to be very well received by property investors,” he said.


Tax reform agenda

The OTS is an independent adviser to government on simplifying the UK tax system.

Its latest report on CGT, ‘Simplifying practical, technical and administrative issues,’ proposed creating a single central hub for paying CGT. This would integrate the current three routes by which people pay the tax, (self assessment, tax on disposal of residential property and the real-time CGT service).

It recommended lengthening the deadline for paying CGT by married couples or civil partners who are divorcing or separating. The new timeline would be to the end of the tax year at least two years after separation, or in Scotland, any reasonable time set for transfer of assets in line with a court-approved financial agreement.

It highlighted the need for improved awareness among second homeowners about how to nominate one property for Private Residence Relief, and proposed enabling that nomination through a Single Customer Account.

Further, the OTS said that where receipt of cash on sale of land or a business is deferred, CGT should be paid when the cash is received.

CGT was paid by 265,000 individuals in the UK, amounting to £8.3bn in tax take, in the financial year 2017-18.

That same year, 31.2m people paid £180bn of income tax.

The OTS’s first report, ‘Simplifying by Design,’ was published in November 2020. Together, the two reports “represent a comprehensive review of CGT,” it said.

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