Selling a property in the UK can have significant tax implications, particularly concerning Capital Gains Tax (CGT). Understanding the reporting requirements and deadlines is crucial to ensure compliance and avoid potential penalties.

What is Capital Gains Tax (CGT)?

CGT is a tax on the profit made when you sell or dispose of an asset that has increased in value. It's the gain that's taxed, not the total amount received. For property sales, this typically applies to:

• Buy-to-let properties

• Second homes

• Inherited properties (if not used as your main residence)

• Land

• Business premises

Your main residence is usually exempt from CGT due to Private Residence Relief, provided you've lived in it throughout your ownership.

Recent Changes to CGT Rates

As of 30 October 2024, the rates of CGT on property have been adjusted to align with other assets:

• Basic rate taxpayers: 18%

• Higher rate taxpayers: 24%

These rates apply to property disposals from 6 April 2024 onwards.

60-Day Reporting and Payment Deadline

For UK residents selling or disposing of UK residential property that results in a CGT liability, it's mandatory to report the gain and pay the tax within 60 days of the completion date. This rule applies to disposals completed on or after 27 October 2021. More details can be found on the HMRC website: Report and pay your Capital Gains Tax.

Steps to Report and Pay CGT:

1. Gather Necessary Information:

   • Dates of property acquisition and disposal

   • Purchase and sale prices

   • Associated costs (e.g., stamp duty, legal fees, estate agent fees)

   • Details of any improvements made to the property

   • Information on any tax reliefs or exemptions claimed

2. Calculate the Gain:

   • Deduct the purchase price and allowable expenses from the sale price to determine the capital gain.

   • Apply any available reliefs or exemptions.

3. Report the Gain:

   • Use the "Capital Gains Tax on UK property" online service via the Government Gateway to report the disposal: here.

   • If you're unable to report digitally, contact HM Revenue & Customs (HMRC) for alternative methods.

4. Pay the Tax:

   • An estimate of the CGT due must be paid within the same 60-day period.

   • Payments can be made through the online service or via bank transfer/cheque.

Penalties for Late Reporting and Payment

Failing to meet the 60-day deadline can result in:

• Late Filing Penalties:

  • £100 if the return is not filed within 60 days

  • Daily penalties of £10 per day for up to 90 days if more than 3 months late

  • Further penalties if the delay exceeds 6 or 12 months

• Interest on Unpaid Tax:

  • Interest accrues from the due date until payment is made.

It's essential to adhere to these deadlines to avoid accumulating penalties and interest.

Exceptions to the 60-Day Rule

You are not required to report the disposal within 60 days if:

• The gain is fully covered by Private Residence Relief.

• The disposal is a 'no gain, no loss' transfer between spouses or civil partners.

• The gain is covered by your annual CGT exemption (£3,000 for the 2024/25 tax year).

• The property is sold at a loss.

However, even if no tax is due, it may be beneficial to report the disposal to establish the loss for future tax planning.

Conclusion

Navigating the CGT reporting requirements for property sales in the UK requires careful attention to detail and adherence to strict deadlines. It's advisable to consult with a tax professional to ensure compliance and optimize your tax position.

For more detailed guidance, refer to the official HMRC resources or seek advice from qualified tax advisors.

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