If you’ve recently sold a UK residential property, you need to make sure you stay on top of your tax obligations. One of the most important things to do is report and pay Capital Gains Tax (CGT) on any profit made from the sale. Missing the deadline could mean penalties, so understanding when and how to file your CGT return is key. Here’s what you need to know.
When Do You Need to Report & Pay Capital Gains Tax?
If you make a taxable gain when selling a UK residential property, you must report it to HMRC and pay any CGT within 60 days of the sale’s completion. This applies whether you’re an individual, trustee, or personal representative of an estate.
You’ll likely need to report and pay CGT if you’ve sold:
A buy-to-let property
- A second home
- An inherited property that has gone up in value
- A UK holiday home
If the property was your main residence for the entire time you owned it and qualifies for Private Residence Relief (PRR), you won’t need to report the sale.
How to Submit Your CGT Return
1. Work Out Your Capital Gain
First, you need to calculate how much profit you’ve made. This is your total gain:
Sale price – Purchase price – Allowable expenses
Expenses you can deduct include:
- Stamp Duty paid when you bought the property
- Estate agent & legal fees
- Costs of improvements (but not regular maintenance or repairs)
Once you’ve deducted these, you can also apply your Annual Exempt Amount (£3,000 for 2024/25). The remaining gain is taxed at 18% for basic-rate taxpayers and 24% for higher-rate taxpayers.
2. Submit Your CGT Return
You must file CGT return using HMRC’s Capital Gains Tax on UK property account. If you don’t already have a Government Gateway account, you’ll need to set one up.
3. Pay the Tax Within 60 Days
Once you’ve submitted your return, you must pay the CGT within 60 days to avoid penalties. If you don’t, HMRC will start adding interest charges, which can quickly add up.
What Happens If You Miss the Deadline?
If you don’t file return on time, HMRC can issue penalties, including:
- A £100 fine for missing the 60-day deadline
- Extra penalties if the return is over 3, 6, or 12 months late
- Interest charges on any unpaid tax
These fines can get expensive, so it’s worth sorting out your return as soon as possible.
Conclusion
Filing a Capital Gains Tax return might not be the most exciting part of selling a property, but it’s one you can’t afford to ignore. If you’ve recently sold a home, make sure you report and pay any tax due within 60 days. And if you need help to file CGT return correctly, UK Property Accountants can take the stress out of the process.
