Capital gains on the disposal of UK residential property must be disclosed to HMRC and any capital gains tax due must be paid within 60 days of completion.
Do I have to complete a 60-day Return?
If you dispose of UK residential property by way of sale or gift you will have to make a 60-day return unless there is no capital gains tax to pay.
This applies to UK-resident and non-resident individuals.
A return will not normally be needed when you sell your only or main residence as principal private residence relief would apply so that no capital gains tax is payable. This is only the case if the property was your main residence for the whole of your ownership. If the property was rented out, or you had another property that was your main residence, then capital gains tax might be due.
Returns are not required for commercial properties.
For mixed use properties, such as a shop with a flat over, the gain will have to be apportioned so that the residential part can be declared.
What about losses?
When considering whether any capital gains tax is payable, you can take into account capital losses brought forward from previous years.
You can also deduct losses made in the current tax year, provided that the disposal that gave rise to the loss had already taken place before this residential property disposal.
You are not allowed to anticipate capital losses that you expect to make on later disposals.
You can deduct the capital gains tax annual exemption, which has been £3,000 from 6 April 2024.
What rate of tax will I pay?
To calculate the tax payable:
- Estimate your total income for the tax year.
- Add on the capital gain, net of the annual exemption and any allowable losses.
- To the extent that the gain falls within your basic rate band the tax is charged at 18%.
- To the extent that the gain exceeds your basic rate band the tax is charged at 24%.
How do I submit the Return?
HMRC provide an online service which can be accessed here.
You will need to create a Capital Gains Tax on UK property account, using your Government ID and password.
If you don’t have a Government Gateway ID and password, you can create one as part of the process.
Alternatively, you can appoint an agent to prepare and submit the Return for you.
What if I need to make changes to the Return?
It is possible to make amendments to your 60-day Return using your UK property account, for example to correct any estimates used or to claim additional reliefs or losses. You can’t do this if you have already submitted a self-assessment Tax Return for the relevant year.
If you would normally complete a self-assessment Tax Return then the residential property disposal should be included on that Return; any amendments can then be made via the self-assessment Return.
If you do not normally complete a self-assessment Tax Return you can ask HMRC to issue one.
How do I pay the tax?
You have 60 days from the date of completion to pay any tax due.
When you complete the 60-day return, HMRC will issue you with a payment reference to use and provide details of how to make the payment online or by cheque.
For more information
If you have any questions or would like any help quantifying your gain or completing your 60-day Return please contact me.
