The Office of Tax Simplification has published the second report from its capital gains tax review. The report covers a wide range of areas from moving home to getting divorced, running or investing in a business and issues affecting land transactions. It also highlights broader concerns around the low level of public awareness of CGT, and the extent to which administrative systems could do much more to support taxpayers. The report makes 14 recommendations, including the following:
integrating CGT into the single customer account;
extending the reporting and payment deadline for the UK property tax return to 60 days;
reviewing the practical implications of private residence relief nominations;
extending the period in which divorcing or separating couples can transfer assets between themselves at no gain/no loss; and
considering the CGT payment date where proceeds are deferred when a business is sold.
Responding to the report, Nimesh Shah, CEO at Blick Rothenberg said: ‘Whilst the OTS’s latest report suggests a number of welcome improvements, these are relatively minor, and the report does not tackle the major issue that the overall CGT regime is far too complex and requires a complete overhaul if it is genuinely going to be fit for purpose. At its basic level, there are five different rates of CGT that could apply to a transaction, and this is not addressed anywhere’.
Shah also notes that HMRC may be reluctant to extend the timeframe for reporting and payment of CGT on disposals of UK residential property, having raised over £1.3m from late-filing penalties in the final six months of 2020.
Gary Ashford, tax partner at Harbottle & Lewis picks up on a particularly topical point: ‘The report mentions non-residential use and the fact that private residence relief is not available for any part of a home that is used exclusively for the purposes of a trade, business, profession or vocation but has failed to recognise the changes in work patterns due to Covid-19. This should now be relaxed, given the rise in the proportion of people working from home, now and going forward’.
The Office of Tax Simplification has published the second report from its capital gains tax review. The report covers a wide range of areas from moving home to getting divorced, running or investing in a business and issues affecting land transactions. It also highlights broader concerns around the low level of public awareness of CGT, and the extent to which administrative systems could do much more to support taxpayers. The report makes 14 recommendations, including the following:
integrating CGT into the single customer account;
extending the reporting and payment deadline for the UK property tax return to 60 days;
reviewing the practical implications of private residence relief nominations;
extending the period in which divorcing or separating couples can transfer assets between themselves at no gain/no loss; and
considering the CGT payment date where proceeds are deferred when a business is sold.
Responding to the report, Nimesh Shah, CEO at Blick Rothenberg said: ‘Whilst the OTS’s latest report suggests a number of welcome improvements, these are relatively minor, and the report does not tackle the major issue that the overall CGT regime is far too complex and requires a complete overhaul if it is genuinely going to be fit for purpose. At its basic level, there are five different rates of CGT that could apply to a transaction, and this is not addressed anywhere’.
Shah also notes that HMRC may be reluctant to extend the timeframe for reporting and payment of CGT on disposals of UK residential property, having raised over £1.3m from late-filing penalties in the final six months of 2020.
Gary Ashford, tax partner at Harbottle & Lewis picks up on a particularly topical point: ‘The report mentions non-residential use and the fact that private residence relief is not available for any part of a home that is used exclusively for the purposes of a trade, business, profession or vocation but has failed to recognise the changes in work patterns due to Covid-19. This should now be relaxed, given the rise in the proportion of people working from home, now and going forward’.
