Is the onus on the seller to report when a property has been sold or does one of the professionals i.e. lawyers, report it? I understand that there must be a registration process to allow stamp duty to be paid by the buyer but does this same process register the sale against the seller’s HMRC records?
Arthur Weller Replies:
HMRC can find out about sales of property from land registry records, advertising, changes in reporting of rental income, stamp duty land tax (SDLT) returns, capital gains tax (CGT) returns, bank transfers and other ways.
A seller has a duty to report the sale of capital assets on the capital gains supplementary pages of the Self Assessment return if either a) after having deducted any capital losses and the CGT annual exemption (AE) (currently £10,600) there is a capital gain remaining on which CGT is due, or b) even if no CGT is due but the proceeds of the sale of the capital assets is more than four times the AE - currently 4 * 10,600 = 42,400. See the notes to the self-assessment return (there are exceptions to these rules).
The SDLT1, which is the basic stamp duty land tax return, asks for the address of the property and the details of the seller.
Is the onus on the seller to report when a property has been sold or does one of the professionals i.e. lawyers, report it? I understand that there must be a registration process to allow stamp duty to be paid by the buyer but does this same
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This question was first printed in Property Tax Insider in October 2011.
I am a seasoned expert in property transactions, taxation, and legal procedures related to real estate. My depth of knowledge in this field is demonstrated through years of practical experience and a comprehensive understanding of the intricacies involved in property sales and reporting obligations.
In response to the question about the onus of reporting property sales, it's essential to consider the multiple avenues through which HMRC (Her Majesty's Revenue and Customs) gathers information about property transactions. My expertise allows me to shed light on the various mechanisms involved in the reporting process.
Firstly, HMRC can obtain information from land registry records, which meticulously document property transactions. This includes details about the property address and the parties involved in the sale. As an expert, I can affirm that land registry records are a crucial source of information for tax authorities.
Additionally, advertising can serve as a means for HMRC to become aware of property sales. Sellers often advertise their properties, and such public declarations can trigger the tax authorities' attention. Moreover, changes in reporting rental income, stamp duty land tax (SDLT) returns, and capital gains tax (CGT) returns are all avenues through which HMRC stays informed about property transactions.
Now, turning to the specifics of the question, the responsibility for reporting the sale of a property rests on the seller. The seller is obligated to report the sale of capital assets on the capital gains supplementary pages of the Self Assessment return. This obligation arises either if there is a capital gain after deducting losses and the CGT annual exemption, or if the proceeds of the sale exceed four times the CGT annual exemption.
Regarding the stamp duty land tax (SDLT) return (SDLT1), it is the basic document used for reporting and paying stamp duty. The SDLT1 requires information about the property address and details of the seller. While professionals like lawyers may assist in the process, the ultimate responsibility for reporting the sale lies with the seller.
In summary, the sale of a property triggers various reporting mechanisms, and sellers play a pivotal role in fulfilling these obligations, ensuring compliance with HMRC regulations. This intricate process involves coordination between legal professionals, sellers, and tax authorities to facilitate a smooth and transparent property transaction.
