This is an online system for reporting capital gains and losses, which allows the taxpayer to pay any CGT due immediately, rather than wait until the due date of 31 January after the end of the tax year in which the loss or gain arose. Real time CGT is designed for people who are not within the self-assessment system and need to report a one-off gain, but it can be used by any individual.
Real time CGT is an entirely voluntary system, but we need to know if you have used it, as we must report the reference number of their real time transaction return on your SA return, and include any CGT already paid under that system (see SA 108 notes to 2017/18 tax returns).
There is no detailed guidance about how real time CGT fits into, or around, the SA tax return system, because there is no law underpinning the real time transaction return. There was no consultation with the professional bodies before it was introduced (in early 2017), and very few accountants are aware of it.
This is unsurprising as tax agents are blocked from using the real time CGT service on behalf of our clients. Real time CGT appears to be an add-on to the personal tax account, which can only be accessed by the taxpayer, and not by the taxpayer’s agent on their behalf.
Real time CGT may be helpful for individuals who need to report one-off gain, but who don’t want to get drawn into self-assessment. To help a client use it we will have to stand by your elbow as you create a government gateway account to access the system.
But real time CGT should come with a health warning. As there is no law underpinning the system there are no safeguards for taxpayers. For example, it is not clear whether reporting via the real time transaction return meets the legal requirements for reporting a gain, and thus avoiding a penalty for failure to notify. If a taxpayer overpays CGT through real time CGT, it is not clear how that over payment can be recovered.
Written by the Tax Advice Network