HMRC issue incorrect CGT allowance to thousands of taxpayers

HM Revenue and Customs (HMRC) has recently issued nearly 350,000 incorrect short tax returns, indicating an error in taxpayers’ capital gains allowance.

CGT is payable on the overall gain from the sale of an asset such as a business, second home, buy-to-let property and shares.

The current CGT rates are 28 per cent on gains from residential property, 20 per cent on other chargeable assets.

There is also an annual CGT exemption, known as the annual exempt amount, which is £12,000 for individuals and £6,000 for trusts for the new tax year 2018/19.

However, figures revealed that the annual self-assessment form distributed a capital gains tax (CGT) exemption of £400 less than it should have been.

The error occurred because the figure for the 2017-18 tax year was used, and not the correct allowance of £11,700 for 2018-19.

According to HMRC, the mistake was in the notes rather than the tax return itself and only 600 taxpayers fall into this category.

Subsequently, it has been confirmed that the notes have already been corrected online and taxpayers do not need to take any action.

The tax office has confirmed that anyone who filled out the capital gains page unnecessarily would not suffer any impact on their tax liability.

An HMRC spokesperson said: “We apologise for any confusion and are correcting the error. Nobody will lose out as a result of this.”

Wilder Coe Ltd
Our mission is to care for each of our clients so that their expectations and goals are met and exceeded. So whether you’re looking for tax minimisation, wealth maximisation or simply a professional service with a personal touch Wilder Coe Ltd’s partner-led approach, combined with a commitment to developing an understanding of your business and a rapport with you and your staff, ensures that you and your business always get the right level of attention and service you need.

We are a multi-faceted practice providing a wide range of professional business services including accountancy, auditing and taxation. For more information, please contact us.