Chancellor Rishi Sunak’s Budget did not ignore Capital Gains Tax after all.
For those selling UK residential property the deadline to file a tax return has been extended from 30 days to 60 days - and it’s already come into effect.
Commenting on the change, Tim Walford-Fitzgerald, Private Client Partner at accountancy firm HW Fisher says: “This is welcome news and it is positive to see that the Chancellor has recognised the reality of these transactions. To anyone selling a property and up against tight deadlines to receive registrations you can breathe easy.”
Just last week the Association of Accounting Technicians expressed its worry about the old 30 day limit.
For accountants to undertake this work on a client's behalf, they need specific authorisation from their client, which must be gained using an agent services account and emailing authorisation links to clients for them to create a Government Gateway account.
As a result, AAT members expressed their concerns about both the incredibly tight timeframe for reporting any CGT liability and a widespread lack of awareness amongst those selling residential property.
Last week Ann White, director of Abacus Accountancy and Payroll Services, backed the ATT case saying: "HMRC hasn't given this enough thought. I can see that they want to get money into the coffers earlier, which isn't necessarily a problem, but a 30-day deadline isn't very long between completing on a property and assessing what the gain is.
“The majority of solicitors I've dealt with also didn't know that this requirement is now in place, and neither do many of my clients – causing them to panic and in some cases have to pay a fine. It's also a long-winded process for accountants to get authorisation for clients to do this."
However, the absence of any more fundamental CGT reform in the Budget has been welcomed by Richard Davies, head of lettings at London-focussed agency Chestertons.
He says: “We welcome the Chancellor’s decision to not raise Capital Gains Tax. The tax rise could have presented the final tipping point for landlords to sell their portfolio. The avalanche effect of this would have meant a subsequent decrease in rental properties during a time when UK tenants are already facing a shortage of suitable homes within their budget.”
But his colleague Guy Gittins - Chestertons chief executive - says he is disappointed at the absence of Inheritance Tax reform. “We would like to have seen the Chancellor raise the nil-rate band from its current rate of £325,000 as this has been in place since the tax year 2009/10.
“Inheritance tax has, in real terms, been increasing since then as average UK house prices have risen by 70 per cent. Given that for most people, the bulk of their inheritance is the property they live in rather than an investment this seems an unfair burden.”
Meanwhile Jackson-Stops chief executive, Nick Leeming, expressed his disappointment at the absence of stamp duty reform.
“The SDLT holiday has been incredibly effective in supporting the market through a challenging 18 months. As Britons place a renewed importance on their homes, factors beyond a financial saving are in play and buyers are acting with intent. According to our research, there are now 25 buyers chasing every available property, as buyers reassess how their home contributes to their changing lifestyle aspirations.
“It is disappointing that we didn’t see further long-term measures put in place to support the housing market - taxation is one of the biggest barriers facing property buyers and further reform would encourage fluidity across the buying lifecycle.
“Finally, it also helps to sustain thousands of jobs which rely on the property market, including tradespeople, removal companies and suppliers of white goods, and supports a thriving property market for years to come.”