Introduction to this document

Request to pay capital gains tax in instalments letter

For individuals, capital gains tax is payable by 31 January following the end of the tax year in which the gain occurred, e.g. 31 January 2019 for a gain made in 2017/18. Usually you’ll have enough money from the transaction to pay the tax. However, proceeds may not be received all at once, for example, you might have agreed payment by instalments or you may not receive any money for the asset, but HMRC will tax the transaction as if you sold it for what it’s worth.

Claim

You may be able to pay the tax in instalments by making a claim under s.280 (proceeds in instalments) or s.281 (gifts) Taxation of Chargeable Gains Act 1992 by notifying HMRC in writing - either on your tax return or by letter.

For a claim under s.280 to qualify, the period over which you receive the proceeds from the sale must exceed 18 months. However, where all or part of the proceeds aren’t known at the time of the sale, the unknown amount will not qualify.

For a s.281 claim the assets must either be land, unlisted shares or listed shares which gave you control of the company immediately before the transaction. However, a claim is not allowed for gifts where you could instead defer the tax by making a claim for holdover relief, e.g. gifts of certain types of business asset.

Once you make the claim, HMRC will inform you of the amount and due dates of the instalments. Note. Interest will be charged at HMRC’s usual rate for overdue tax (2.75% per annum from August 2016).

How to use

Use our Request to Pay Capital Gains Tax in Instalments Letter to make the claim. You’ll need to enter some details about the disposal. You can either use the letter on its own, or use the body text in the white space on the capital gains pages on your tax return.