CGT - Shares and Property

[Deleted User]

macman said:

purdyoaten2 said:

Jeremy535897 said:

macman said:

Thanks for your reply, but the property gain has to be reported and paid within within 30 days of completion, so cannot be delayed until submission of the 20/21 tax return.

The form I was referring to is the one on the link below, that allows you to do the calculation before logging into the account, and then upload it when you report the gain. If you go through this and enter dummy data then you will see that this only allows you to enter losses incurred in the tax years prior to 20/21, not in 20/21 itself.

I can only assume that HMRC has failed to update this form since the start of the current tax year.

https://www.tax.service.gov.uk/calculate-your-capital-gains/resident/properties/

I have never used this, but can you not now report multiple disposals at once, whether of property or otherwise, using this system?

Had a look at it again - it appears that it is only meant to be a guide to ascertain projected capital gains liability on a disposal - similar to, for example, ‘check what state pension you are likely to receive’. Nothing more, nothing less.

May be, but the tax year question is quite specific, and the implication is that, should you agree with the calculation it produces, then you upload it at the time of reporting the gain in order to  'show your workings'.

I got through to HMRC and they denied that the date field was out of date until I went through it with them while on the call. They then suggested that you use the field for 19/20 to generate the form, and add a note when uploading it to state that the losses were actually incurred in 20/21. In other words, bodge it...

Ultimately, what matters is that the losses already registered are picked up elsewhere in the system and set against the final bill that they generate, rather than having to be reclaimed at a date beyond the 30 days. I'm not entirely confident that this will happen.

But surely you would still complete the capital gains section of the return where would declare all capital gains and losses for that year?

Jeremy535897

I see you cannot use the calculator at https://www.gov.uk/tax-sell-property/work-out-your-gain

"Work out if you need to pay

Once you know what your gain on the property is, you can calculate if you need to report and pay Capital Gains Tax.

You cannot use the calculator if you:

• sold land
• sold business premises
• sold other chargeable assets in the tax year, for example shares
• reduced your share of a property that you still jointly own
• claim any reliefs other than Private Residence Relief or Letting Relief
• are a company, agent, trustee or personal representative"

This article from KPMG says you can adjust for realised losses:
https://home.kpmg/uk/en/home/insights/2020/04/tmd-changes-to-the-reporting-of-disposals-of-uk-residential-properties-from-6-april-2020.html
"When computing the taxable gain, only capital losses which have already been realised can be deducted (i.e. any predicted or anticipated losses that will arise at a later date are ignored). Relief for such losses may be claimed via the self-assessment return (subject to the normal CGT loss relief rules)."

[Deleted User]

“ Relief for such losses may be claimed via the self-assessment return (subject to the normal CGT loss relief rules)."

My point exactly.

Jeremy535897

[Deleted User] said:

“ Relief for such losses may be claimed via the self-assessment return (subject to the normal CGT loss relief rules)."

My point exactly.

Indeed, but you may not want to pay excess tax on the property gain and have to wait to claim it back on filing the SA return. KPMG are saying you can deduct current year realised losses up to the date of the property disposal from the gain on the property on the 30 day rule return.

macman

[Deleted User] said:

macman said:

purdyoaten2 said:

Jeremy535897 said:

macman said:

Thanks for your reply, but the property gain has to be reported and paid within within 30 days of completion, so cannot be delayed until submission of the 20/21 tax return.

The form I was referring to is the one on the link below, that allows you to do the calculation before logging into the account, and then upload it when you report the gain. If you go through this and enter dummy data then you will see that this only allows you to enter losses incurred in the tax years prior to 20/21, not in 20/21 itself.

I can only assume that HMRC has failed to update this form since the start of the current tax year.

https://www.tax.service.gov.uk/calculate-your-capital-gains/resident/properties/

I have never used this, but can you not now report multiple disposals at once, whether of property or otherwise, using this system?

Had a look at it again - it appears that it is only meant to be a guide to ascertain projected capital gains liability on a disposal - similar to, for example, ‘check what state pension you are likely to receive’. Nothing more, nothing less.

May be, but the tax year question is quite specific, and the implication is that, should you agree with the calculation it produces, then you upload it at the time of reporting the gain in order to  'show your workings'.

I got through to HMRC and they denied that the date field was out of date until I went through it with them while on the call. They then suggested that you use the field for 19/20 to generate the form, and add a note when uploading it to state that the losses were actually incurred in 20/21. In other words, bodge it...

Ultimately, what matters is that the losses already registered are picked up elsewhere in the system and set against the final bill that they generate, rather than having to be reclaimed at a date beyond the 30 days. I'm not entirely confident that this will happen.

But surely you would still complete the capital gains section of the return where would declare all capital gains and losses for that year?

To clarify: this is actually arising on my wife's account. She is in PAYE and not in self-assessment; both the gain and the loss are 'one-off events' and it's unlikely that she will need to complete a self-assessment return again for the foreseeable future.

If the property gain is paid by end February 2021 as required, then any self-assessment return that also included the share loss would not be required until end January 2022: therefore it would take a year or more to recover the excess amount of CGT paid.

macman

Jeremy535897 said:

purdyoaten2 said:

“ Relief for such losses may be claimed via the self-assessment return (subject to the normal CGT loss relief rules)."

My point exactly.

Indeed, but you may not want to pay excess tax on the property gain and have to wait to claim it back on filing the SA return. KPMG are saying you can deduct current year realised losses up to the date of the property disposal from the gain on the property on the 30 day rule return.

Thank you, that's exactly the situation arising.

Jeremy535897

Use the bodge. The legislation is in schedule 2 Finance Act 2019.  Paragraph 7 deals with it:

(1)This paragraph applies for determining the amount of capital gains tax (if any) which is notionally chargeable on a person as at the filing date for a return.

(2)The amount of capital gains tax notionally chargeable on the person as at that date is the amount of that tax for which the person would be liable for the tax year concerned, ignoring, for this purpose, the following disposals—

(a)disposals which have a completion date later than the completion date of the disposal in respect of which the return is made (but see sub-paragraph (3)), and

(b)disposals on which gains accrue but which are not disposals to which this Schedule applies.

(3)A disposal on which a loss accrues is not to be ignored under sub-paragraph (2)(a) if the time at which the disposal is made (as determined under section 28 of TCGA 1992) falls on or before the completion date of the disposal in respect of which the return is made.

(4)For provision relevant to the operation of this paragraph, see paragraphs 14 and 15 (making of assumptions, reasonable estimates etc

https://www.legislation.gov.uk/ukpga/2019/1/schedule/2

macman

Thank you: I shall quote that to HMRC if they try and bill for the gross amount without offset...