Offsetting overpaid CGT

Many people are looking to file their tax return early for 2020/21. However, an issue has come to light where a 30-day capital gains tax (CGT) return has also been filed during the year. What’s the issue and the solution? 

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Since April 2020 anyone who makes a chargeable gain on a UK residential property where there is a tax bill must report the gain and pay an estimate of the tax to HMRC within 30 days of completion. This tax return requires the seller to estimate their income in order to apply the appropriate rate of CGT. The actual level of income is often not known until the end of the tax year. In light of the pandemic, it’s easy to see how someone filing a 30-day CGT tax return might have assumed all the gain would be taxed at 28%, but on reflection some is taxable at 18% instead. More information about 30-day reporting is available here.

As the gain must also be reported on the self-assessment tax return, it seems reasonable to assume that any overpayment would be sorted out once the return is filed. However, it transpires that HMRC’s computer system does not offset the overpaid amount automatically. In order to get the tax offset, there are two options:

  • amend the 30-day return to correct the amount before the tax return is filed. This sorts out the overpayment, albeit separately to the main tax return;
  • or if the return has already been filed, contact HMRC directly to request a manual offset. The problem is known to HMRC’s officers and so should be done swiftly. This can be done by the taxpayer, or by their accountant or tax advisor.

Note. An amendment cannot be made due to losses that were realised later on in the tax year, even if these absorb the gain in full. In these circumstances, requesting a manual offset will be the only option.

What to do next

For further information on this and other topics contact Tony on 07974-418819 or email at or through the contact page of the website

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