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When you sell a UK residential property and Capital Gains Tax is due, you may need to report the disposal to HMRC in a CGT return and pay the tax within 60 days of completion - even if you will be filing a Self Assessment tax return.

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Who is affected?

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You may be affected if you are selling a residential property that:

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• was not your main residence for the entire period of ownership

• is a second home or a holiday home

• is a rental or investment property

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If you are selling your home, there is usually no CGT to pay if the property has been your only or main residence throughout your entire period of ownership.  But, in all other cases, i.e. where there is a CGT liability, you will need to file a CGT return and pay the tax within 60 days.

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Non-UK residents who sell UK land or property need to file a CGT return with HMRC within 60 days even if no CGT is payable.

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It is important to review your position carefully because you may be liable for HMRC interest and penalties if the 60-day deadline applies and you miss it.​

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Reporting the sale to HMRC

 

In most cases, the easiest way to complete the 60-day CGT return and make the tax payment is to set up a "CGT on UK Property Account" via HMRC's website.

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If you have a tax adviser guiding you through the process, you can share access to your CGT on UK Property Account with them and they can complete the CGT return for you online.

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CGT reporting vs Self Assessment

 

The 60-day CGT return and tax payment are not necessarily final.  The CGT return provides HMRC with your best estimate of the tax due at the time.

 

Your final CGT position is calculated after the end of the tax year in which the sale takes place, and is reported in your Self Assessment tax return.

 

The tax payment made within the 60-day window is treated as a payment on account of your final CGT liability.

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Where a CGT return is required, it must be filed with HMRC in addition to your Self Assessment tax return (unless the gain is correctly reported in a Self Assessment tax return that is filed before the 60-day reporting deadline).

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CGT rates and allowances

 

Capital gains on residential property are taxed at:

 

• 18% for basic rate taxpayers

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• 24% for higher and additional rate taxpayers

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If the capital gain causes you to exceed the basic rate tax band and move into the higher or additional rate tax bands, part of the gain may be taxed at 18% and part at 24%.

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When calculating the taxable gain for the 60-day CGT return, you may deduct your Annual Exempt amount (currently £3,000) where available.  You can also take into account any capital losses brought forward from earlier tax years, as well as losses made in the part of the tax year before the property sale completing.

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Does the CGT return need to be accurate?

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Yes, HMRC expects reasonable calculations, and it is best to ensure the calculation is accurate as possible because interest may be due if you underestimate your CGT liability.  On the other hand, overestimating your CGT liability generally means paying more tax sooner than you need to.

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If you are selling a property, or have recently sold one, and would like advice on your CGT reporting requirements, please do not hesitate to get in touch.