You must report and pay any Capital Gains Tax (CGT) due on UK residential property within 60- days of completion. This rule came into effect in 2020, and yet many taxpayers are still not aware of the limited timeframe in which CGT must be paid when a property is disposed of.

It is no longer the case that you can wait to report any gains in that year’s tax return, it is a requirement to report and pay the CGT within the specific 60-day window. Individuals, trustees and personal representatives of deceased persons who sell or otherwise dispose of property must all comply with this 60-day reporting rule, while also declaring the disposal on their Self Assessment tax return.

Please note, this article is relevant only for those that are UK tax resident. There are separate requirements for those who are non-UK tax resident.

Impact of the 60-day rule

It was initially estimated that the introduction of the 60-day reporting requirement would impact around 75,000 individuals each year. UK residents that dispose of a residential property on which chargeable gains arise, such as a second home or rental property, are inevitably affected.

The annual exempt amount for CGT has been reduced for the 2024-25 tax year to £3,000 (£1,500 for trusts). As a result of this, the incidence of reportable gains can be expected to increase.

When you come to complete your CGT return, it is likely the tax year will not have ended, meaning it will be necessary to make assumptions and reasonable estimates to ensure timely reporting. You will need to consider likely taxable income for the year (to determine the rate of tax at either 18% or 24%) and other gains, it is also permissible to factor in the annual exemption and any available capital losses.

Exceptions to the rule

60-day reporting is not required where the disposal is on a no-gain, no-loss basis (most commonly between spouses or civil partners) or where there is no CGT to pay because of the availability of reliefs such as private residence relief or annual exemption.

Where a gain arises in relation to a mixed-use property, only the portion of the gain that is the residential property gain is to be reported and paid within 60 days. The commercial property element of the gain just gets directly reported onto your Self Assessment tax return.

Jointly owned properties

The rules apply to each owner, as opposed to each property, so you must report your own individual gain or loss.

Penalties

Penalties for non-compliance and late reporting are significant, therefore it’s important to consider your reporting obligations at an early stage so that any queries can be resolved well before completion, which triggers the 60-day filing submission window.

Automatic penalties apply to late filing of the standalone CGT return and late payment of the CGT liability, with further penalties and interest applied in a similar way to that of self assessment. The penalties can only be appealed if there is a reasonable excuse and you then filed your return or document without delay once the reasonable excuse had ended.

How M+A Partners can help

We can calculate your capital gains tax liability and prepare the 60-day online forms on your behalf. We will provide you with a fixed price quote for dealing with the 60-day CGT reporting – giving you certainty over the cost of complying with this legislation and reporting regime.

Written By