Jenni Davie looks at the reporting of capital gains outside the self-assessment regime.
HMRC’s real-time capital gains tax reporting service launched in April 2023 and is aimed at individuals not currently in the self-assessment system.
This service allows those individuals to report their gains and pay outstanding tax in real time, omitting the former requirement to complete a tax return.
Gains on personal assets
The real time reporting service is an optional service available to UK residents who have chargeable gains arising on the disposal of personally held assets. This includes shares and other investments, but currently does not include gains on life insurance policies.
Gains on personal items with a lifespan of over 50 years (e.g., paintings, jewellery and antiques) are required to be reported where proceeds exceed £6,000, and they are not deemed to be exempt assets.
Personal assets with a wasting life of less than 50 years (e.g., cars or boats) are exempt from capital gains tax (CGT), and do not need to be reported.
A rule often overlooked is that assets gifted to family or friends can give rise to a capital gain. If you are unsure if your gift falls under the capital gain regime, it is best to seek professional advice.
Deadline
The normal deadline for reporting gains is 31 December following the end of the tax year in which the gain arises.
For example, a gain arising in May 2024 must be reported by 31 December 2025, and any CGT must be paid by 31 January 2026.
Any gains arising on residential property must be reported within 60 days of disposal (FA 2019, s 14; Sch 2, para 3(1)).
Using the service
If you do not already have one, you must set up a Government Gateway account to report the gain. This service is a personal service only and agents are currently unable to report gains on a client’s behalf; similarly, gains cannot be reported on behalf of a trust or estate.
Prior to using the service, you should gather all the information you have regarding the sale; this includes the acquisition cost (or market value when you acquired the asset if it was inherited), any costs associated with acquisition or disposal and, of course, proceeds.
HMRC requires you to upload a calculation showing how you arrived at your gain. This should be a PDF or JPEG document and show acquisition costs, proceeds and any reliefs you are entitled to.
Once you have submitted your calculation, HMRC will send an email which will include a reference number needed for paying the tax. HMRC will then contact you again with details on how to pay the tax.
If you report your capital gains using this service, there is no requirement to then submit a self-assessment return, provided you have no other reason to complete a return. If you are already in the self-assessment system, you can continue to report any gains via your annual return as normal.
Property disposals
HMRC has a separate reporting service for the disposal of residential properties. This is a similar service to the real time service; however, you can engage with your agent to report residential disposals on your behalf.
If you report your gain using this service and are not currently in the self-assessment system, again, there is no requirement to register for self-assessment. HMRC deems you to have met your requirements by reporting once.
CGT thresholds
If your proceeds from a sale are below £50,000 and you have calculated that no tax is due (whether on a property sale or any other asset), you do not need to report the gain to HMRC (TMA 1970, s 8C(1)(b)).
However, if your proceeds exceed £50,000 with no liability, there is still a requirement to report to HMRC using the appropriate means.
Practical tip
You need to consider costs, expenditure, and losses, as well as the CGT allowance, when calculating capital gains; you may also be entitled to certain reliefs. The CGT regime is complex, so if you are unsure how to calculate the gain, contact a professional adviser to assist.
