The Busy Practitioner: Pay up …sooner!

The government has made no secret of its approach that ‘sooner is better’ when it comes to tax receipts into the Exchequer. In particular, legislation is to be introduced (in Finance Act 2019) requiring UK residents to make a payment on account of capital gains tax (CGT) following the completion of a residential property disposal.

The government noted that capital gains arising on disposal of (say) a second home or rental property can be significant, and ‘thinks it is right’ that tax is paid sooner in respect of gains from residential property. In the government’s view, paying the CGT sooner will reduce taxpayer error, and increased compliance.

Out with the old

At present, UK resident individuals generally pay CGT on gains from the disposal of residential property (and other chargeable assets) by 31 January following the tax year of disposal (ie between approximately 10 and 22 months after the disposal) under the self-assessment regime.

For non-UK residents, the scope of CGT was extended (in Finance Act 2015) to include gains on the disposal of UK residential property interests by non-UK resident persons (or by individuals in the overseas part of a split year) from 6 April 2015, and non-resident CGT (NRCGT) returns were introduced together with provisions for payments on account of CGT on NRCGT disposals. Where required, the NRCGT return and payment is due within 30 days of the disposal being completed.

The effect of the proposed provisions in Finance Act 2019 is that the filing and payment provisions for NRCGT returns (in TMA 1970, ss 12ZA–12ZN and s 59AA) are being replaced, and the new rules will apply to both UK residents and non-UK residents. The existing legislation specifying when an advance self-assessment is not required (in TMA 1970, s 12ZG) will cease for disposals on or after 6 April 2020 (see below).

Payment ‘window’

Under the proposed return and payment regime (in the draft Finance Bill 2018/19Sch 2) a return of the residential property disposal will generally need to be made and delivered to HMRC by the 30th day following completion of the disposal. However, the new reporting and payment rules will not apply where the gain on the residential property disposal is not chargeable to CGT (eg where the gain is covered by private residence relief).

A return is not required where the disposal is by a UK resident on which a CGT residential property gain arises (or the disposal is by a non-UK resident of a branch or agency asset) and under the new payment on account rules no amount is due. The same applies if the filing date for the return is on or after the date on which a self-assessment return that takes account of the disposal is due to be, or has been, delivered.

If a return is required and tax is chargeable, a payment on account will normally be payable on the filing date for the return. The government refers to this 30-day period as the ‘payment window’.

There are provisions dealing with the calculation of tax payments on account. In broad terms, this ‘notionally chargeable’ tax is the amount that would be due if (based on the normal rules for calculating chargeable gains) the tax year ended when the disposal was completed. For the purposes of calculating the amount due, only gains to which the proposed new provisions on returns for disposals of land apply are taken into account. However, any unused allowable losses can be used, together with the person’s annual CGT exemption.

If an amount of tax notionally chargeable is less than any previous payments on account for the period, the excess is repayable.

In the absence of provisions to the contrary, the proposed ‘in-year’ payments on account regime could cause problems in terms of accurately calculating the amount to pay. Fortunately, an element of crystal ball gazing is allowed! There are provisions for making reasonable expectations and estimates, dealing with (among other things) anticipated changes in a person’s residence status for the tax year. In addition, in the case of (say) the disposal by an individual of a residential rental property early in a tax year, it may be difficult to estimate the individual’s level of income and therefore the rate(s) of CGT to be applied. However, the proposed legislation allows for reasonable estimates of the amount of taxable income to be used (draft Finance Bill 2018/19, Sch 2, para 8).

Outside the scope

Certain disposals are excluded from the proposed returns and payments on account regime in draft Finance Bill 2018/19, Sch 2.

These include no gain/no loss disposals for capital gains purposes, disposals by a UK resident of assets situated outside the UK qualifying for double taxation relief, and disposals of assets situated outside the UK and taxed on the remittance basis.

Coming soon

The provisions relating to returns and payments on account will apply to disposals of UK land from 6 April 2019 by non-UK residents (or by a UK resident in the overseas part of a tax year), and disposals from 6 April 2020 where a CGT residential property gain arises on a disposal by a UK resident (or by a non-UK resident of a branch or agency asset).

However, for companies liable to corporation tax, the commencement of the above obligation to make payments on account of chargeable gains is to be introduced for disposals from a date to be appointed by Treasury order.


If the filing and payment provisions are introduced as anticipated, practitioners will need to make their clients (especially UK resident ones) aware of the very tight 30-day time limit for reporting and payments on account purposes, where appropriate. Regular communication and a closer working relationship with potentially affected clients are likely to be required.

Mark McLaughlin CTA (Fellow) ATT (Fellow) TEP is a tax consultant to professional firms ( and, co-founder of TaxationWeb ( and Editor of McLaughlin’s Tax Case Review(

Mark McLaughlin

Written by Mark McLaughlin

Mark McLaughlin CTA (Fellow) ATT (Fellow) TEP is a consultant to professional firms with the TACS Partnership LLP ( Mark is also co-founder of TaxationWeb (

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