If you have recently sold a UK property, or are in the process of doing so, it is important to be aware of your potential Capital Gains Tax (CGT) obligations. Since April 2020, HMRC has required individuals, trustees, and personal representatives to report and pay CGT on certain property disposals within 60 days of completion. This rule applies to both UK and non-UK residents, and failure to comply can result in penalties and interest.
Who needs to submit a CGT return?
A CGT return is required when a UK residential property is sold, and CGT is due. This typically applies to:
- Second homes
- Buy-to-let properties
- Holiday homes
- Properties that have not been fully covered by Private Residence Relief
Even if you are unsure whether CGT is payable, it is advisable to seek professional advice. In some cases, a return may still be required even if no tax is ultimately due.
For non-UK residents, the rules are broader. A CGT return must be submitted for any disposal of UK land or property, i.e. both residential and commercial, regardless of whether a gain has been made.
The 60-day deadline
The 60-day deadline begins on the date of completion, not the date of exchange. You must calculate the gain, register with HMRC, report it to HMRC and pay any CGT due within 60 days. This applies whether the property is sold outright, gifted, or transferred in a way that triggers a CGT liability.
HMRC’s online service is the preferred method for submitting the return, offering a secure and efficient way to report and pay. However, for those who are digitally excluded or unable to pass HMRC’s online verification process, paper forms are available.
Common scenarios that may trigger a CGT return
You may need to submit a CGT return if:
- You have sold a property that was not your main residence for the whole of the time you owned it
- You have gifted a property to someone other than your spouse or civil partner
- You have inherited a property and sold it at a gain
- You are a trustee disposing of property held in a trust
- You are acting as a personal representative of a deceased person’s estate
What you will need
To complete the CGT return, the basic information you will need is as follows:
- The date of acquisition and disposal
- The purchase and sale price
- Details of any allowable costs (e.g. legal fees, stamp duty, improvements)
- Information on any reliefs or exemptions claimed
- Your estimated income for the tax year of the property disposal (this affects the CGT rate charged)
More information may be required in more complex cases and it is important to keep accurate records and seek advice early in the process, to ensure compliance and avoid unnecessary delays.
How we can help
At PKF Smith Cooper, our tax specialists are on hand to guide you through the CGT reporting process. Whether you are selling a second home, managing an estate, or acting as a trustee, we can help you determine whether a return is required and ensure it is submitted accurately and on time.
If you have recently completed a property sale or are planning one, please get in touch with our team as soon as possible.
