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Markel Tax

25 Jul 2018

Tax advice: Major changes to CGT reporting and payments and the rules regarding charging electric cars

Every year, our tax and VAT helplines receive over 55,000 calls. Each month, we provide a round-up of topical news and below is a short summary of the key points our team has been discussing with accountants in July.

Major changes to CGT reporting and payment rules for UK residents

The Draft Finance Bill 2019 contains provisions to bring forward the payment and reporting dates for gains on disposals of residential property made by UK residents on or after 6 April 2020.

The main change is that individuals, trustees and companies will be required to make an online return of gains made on the disposal of residential property on or after 6 April 2020 within 30 days of the completion date. Payment of the appropriate amount of tax will be required within the same timeframe. This will be classed as a payment on account. 

Note that use of the completion date is for the purposes of reporting and payment only, for other CGT purposes the relevant date is still the contract date, and the gain will need to be declared on the self-assessment return for the year that contracts are exchanged. 

For most clients, the calculation of the tax will need to be provisional as the rate(s) of tax applicable may not be known until after 5 April following the disposal. The annual exemption, where applicable, can be taken into account in the computation, as can any losses brought forward. Losses made in the same tax year can also be deducted but it is not possible to anticipate losses that may accrue later in the year. Subsequent disposals of residential property at a loss result in a recalculation of the payment on account, but losses made on disposal of other assets do not. These will be taken into account when the self-assessment return is filed, although gains on disposals reported on the new return can be ignored when determining whether to register for self-assessment. 

Disposals that result in a loss, or property which is subject to main residence relief in full, do not need to be reported. Where main residence relief does not cover the whole gain, e.g. because of absences, then the disposal does have to be reported. 

There are various provisions requiring the client to take account of reasonable expectations and estimates when making the return. Amendments to the returns are allowed, broadly in the same way as they are allowed for ordinary tax returns.

The detailed proposals are contained in Schedule 2 of the Draft Bill and are open for consultation until 31 August 2018. 

Electric cars: employees using their own car for business

The rules regarding charging of privately owned electric vehicles by employees at work have been clarified in the Draft Finance Bill 2019. 

In the Autumn budget of 2017 it was announced that, from 6 April 2018, the provision by an employer of electricity to charge an employee’s personal car would be exempt from the benefit in kind charge. It has taken until the publication of Finance Bill 2019 for the draft proposals to be published. 

If adopted, the exemption will be backdated to 6 April 2018. If an employer provides electricity to charge an employee’s own car there is no benefit in kind provided the charging facilities are at or near the workplace. The facilities have to be available to all employees. 

The original announcement required a dedicated charging point to be provided but this requirement has been dropped from the draft legislation. The exemption will not apply where an employer pays for an employee to charge the vehicle away from the workplace. 

Charging a company vehicle at work does not create a car fuel benefit in kind as electricity is not road fuel. 

For further information regarding any of these topics, please contact us on 0345 223 2727 or email
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