How to report and pay capital gains tax on residential property disposals

18 Dec 2023

Gifting Property to Children

Taxpayers have 60 days to report and pay capital gains tax (CGT) when they dispose of UK residential property.

Those within self-assessment must also report the property disposal on their self-assessment tax return. The 60-day reporting and paying rules don’t apply to disposals of non-residential property or non-UK property.

Do the 60-day CGT reporting rules apply to me?

The 60-day CGT reporting rules apply to UK resident:

  • Individuals
  • Trustees
  • Personal representatives
  • Partners in partnerships and limited liability partnerships
  • Joint owners of property

What if I’m not UK tax resident?

There are similar rules for non-UK residents, covering both residential and non-residential property disposals. These are not covered in this article but please get in touch if you’d like advice.

What disposals fall within the 60-day CGT rules?

The rules apply to disposals of UK residential property where there’s CGT to pay.

The 60-day rules only apply to disposals of direct interests in residential property. For example, if you sell or gift a house. The rules don’t apply to disposals of indirect interests, such as a disposal of shares in a company which holds UK residential property (you’d just report and pay any CGT due via self-assessment).

Residential property is land that includes a property suitable for use as a dwelling, or which is being constructed or adapted for such use. If there’s been mixed use during the ownership period, only the residential proportion of the gain and the associated CGT is reportable under the 60-day rules.

You may need to submit a 60-day return if for example you dispose of a:

  • Property you’ve never lived in,
  • Property you’ve only lived in for part of the time you owned it,
  • Holiday home, or
  • Rental property.

The 60-day reporting rules don’t apply where there’s no CGT to pay on the disposal. For example, where:

  • The disposal is a ‘no gain, no loss’ transfer between spouses or civil partners,
  • Any gain on the disposal is fully covered by exemptions or reliefs, such as the annual exemption or private residence relief,
  • Any gain is covered by brought forward losses or losses in the same tax year as the disposal if realised before the disposal, or
  • The property is sold at a loss or nil gain.

This means that if you’re selling your only or main residence you should not be caught by the 60-day rules, provided you have lived in the property throughout the time you’ve owned it. For more information see our article on tax relief on the sale of a property.

In addition, there’s no 60-day reporting requirement if the disposal is:

  • The grant of a lease on commercial terms for no premium, to an unconnected person,
  • Made by a charity,
  • The disposal of a pension scheme investment, or
  • The disposal of a property as part of a trading business and therefore chargeable to income tax not CGT.

How are disposals reported to HMRC?

Disposals are reported to HM Revenue & Customs (HMRC) digitally through a taxpayer’s ‘Capital Gains Tax on UK property account’. Taxpayers must set up their own account via the Government Gateway, and can then choose to either report the disposal themselves or authorise their tax adviser to report the disposal on their behalf.

In the limited circumstances where HMRC accept that a disposal can’t be reported digitally, a paper ‘Capital Gains Tax on UK property return’ must be used.

How do I pay the tax I owe on the disposal?

An estimate of the CGT due on the disposal must be paid, either through the taxpayer’s Capital Gains Tax on UK property account or by bank transfer or cheque.

If a paper return is submitted, HMRC will issue a 14-digit payment reference starting with X. The payment must be made using this reference.

What’s the deadline for reporting and paying CGT on the disposal?

Taxpayers have 60 days from the date of completion of the disposal (not the date of exchange of contracts) to report the property disposal and pay the estimated CGT to HMRC.

Late filing penalties may be charged, together with interest on any unpaid tax.

Sometimes, a 60-day return may not be required, for example if the taxpayer has already submitted a self-assessment tax return reporting the disposal.

How’s the CGT payment on account calculated?

A tax computation must be prepared as part of the 60-day reporting, to calculate the estimated tax due.

When calculating the gain from a residential property disposal, you can take into account your annual exemption (which for individuals is £6,000 for the 2023-24 tax year and is due to be £3,000 for 2024-25 onwards) and any allowable capital losses arising before the disposal, including brought forward losses from earlier years. The tax computation cannot include capital losses arising later in the tax year, but anticipated reliefs can be included.

Submitted returns can be corrected, but they can’t be amended for events that happen after the completion date of the disposal or once the self-assessment return for the year has been filed.

The final tax position will normally be calculated when preparing the taxpayer’s self-assessment tax return. This will consider any extra factors (such as losses realised after the property disposal) that were not reflected in the original tax estimate. The CGT paid is treated as a payment on account of the final self-assessment liability, and interest will be charged where the estimated tax payment is less than the actual CGT due.

Hints and tips

  1. If you’re thinking of selling or gifting residential property, please get in touch with your usual Saffery contact (or Robert Langston) so that we can help you.
  2. Where a property disposal results in a loss, you don’t need to file a 60-day return. But you may benefit from filing a return to claim the loss.
  3. Consider if you can realise capital losses before disposing of a residential property for a gain, so that the losses can be included when calculating the estimated CGT payment on account.
  4. If you’re unsure whether you’re UK or non-UK tax resident, please speak to us as the reporting requirements may be different.
  5. Following the end of the tax year in which a residential property disposal is made, your tax position should be reviewed as you may be due a repayment.

If you have any questions about capital gains tax, please get in touch with your usual Saffery contact or speak to Robert Langston.

Contact Us

Robert Langston
Partner, London

Key experience

Robert is the firm’s National Tax Partner and specialises in advising individuals and companies on cross border tax issues.
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