Accounting, Taxation and Business Planning
If you’ve sold a property or asset in the UK, it’s important to understand the rules around Capital Gains Tax (CGT), particularly the new 60-day reporting requirement for residential property sales.
As UK accountants and tax advisers, we want to make sure you’re clear on what CGT is, how the new rules apply, and how we can help you stay compliant and avoid penalties.
'Let us help you navigate your reporting requirements and ensure your property sale is tax-compliant and stress-free.'
UNDERSTNDING CAPITAL GAINS TAX (CGT) 60-DAY REPORTING
What is Capital Gains Tax (CGT)?
Capital Gains Tax (CGT) is a tax on the profit you make when you sell or dispose of an asset that has increased in value. This includes properties, stocks, shares, and other investments. The tax is only due on the gain (the profit), not the full sale amount.
For residential property, CGT applies when the property is not your main home (unless it qualifies for an exemption, such as the Private Residence Relief). If you sell a property that has appreciated in value, you may need to pay CGT on the difference between the sale price and the original purchase price.
The 60-Day Reporting Requirement for Residential Property Sales
In April 2020, the UK government introduced a 60-day reporting requirement for the sale of residential properties.
If you sell a residential property that is subject to CGT, you must report and pay the tax due within 60 days of the completion of the sale. This is a significant change, as previously, taxpayers could report and pay CGT through their self-assessment tax return, but now this must be done much more quickly.
When Does the 60-Day Reporting Rule Apply?
The 60-day rule applies when you sell or dispose of a residential property in the UK that:
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Isn’t your main home, and
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Has increased in value, meaning you have made a capital gain on the sale.
It’s important to note that this rule doesn’t apply to sales of main residences that qualify for Private Residence Relief. However, if you do sell a second property or buy-to-let property, the gain is taxable, and you must meet the 60-day reporting requirement.
How Much is the Capital Gains Tax?
The rate at which CGT is charged depends on your income and the type of asset. For residential property, CGT is charged at:
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18% if you are a basic rate taxpayer, and
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28% if you are a higher rate or additional rate taxpayer.
How Do You Report CGT in 60 Days?
To comply with the 60-day reporting requirement, you’ll need to:
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Report the Sale to HMRC: You must submit a CGT on Property return within 60 days of the completion date.
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Pay the Tax: Any CGT due must also be paid within the same 60-day period to avoid interest and penalties.
This return can be completed online via the HMRC online services portal. If you fail to report and pay on time, you could face penalties and interest charges.
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What is self-assessment?Self-assessment is a system or regime by which Her Majesty’s Revenue & Customs (HMRC) assesses and collects direct tax in the UK.
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Should I complete a self-assessment tax return?Most people who pay income tax in the UK do not have to complete self-assessment tax returns. These are primarily employees whose tax is deducted at source under the Pay as you Earn system (PAYE). Self-assessment therefore applies to individuals such as the self-employed (sole traders) who earn in excess of £1,000, landlords that receive rental property income, individuals who receive income from savings, investments and dividends, foreign income, income from tips and commission and any other type of untaxed earnings.
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When are self-assessment tax returns due?The UK tax year starts on 6 April each year and ends on 5 April of the following year. Self assessment returns are due on the 31 January following the end of the tax year. For individuals who wish to submit paper returns, the deadline is 31 October following the end of the tax year.
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What are payments on account?Payments on account are amounts that some individuals are required to pay towards their estimated tax liability for the current tax year. They are calculated based on the previous tax years liability and are paid in two equal instalments of 50% each on the 31st January and the 31st July. These amounts are then deducted from the final liability for the year and a balance payment is usually made, together with a first payment on account for the following tax year.
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How do I get the ball rolling?As a starting point, you would need to register with HMRC in order to receive your 10 digit Unique Tax Payer Reference number (UTR). This number will enable you to submit your tax returns online by the 31st January deadline. If you are completing your own tax return, you would need to create an online account with HMRC once you receive your UTR number. Alternatively, if you need to help and support with getting your tax affairs complete and up to date then please get in touch for your free consultation.
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How Can We Help?
The 60-day reporting requirement can be a challenge, especially when you’re juggling other aspects of the property sale. Getting it wrong can lead to costly penalties and interest charges. This is where expert advice can make a real difference.
As UK accountants and tax advisers, we provide the following services to ensure your CGT obligations are met:
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Expert CGT Advice: We’ll help you determine if you owe CGT and guide you through the complex rules, including any exemptions and reliefs available.
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60-Day Reporting Support: We’ll handle the entire process of calculating and submitting your CGT return on time, ensuring that all details are accurate and your payment is made promptly.
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Tax Planning and Compliance: We ensure you understand your tax liabilities and help you plan to reduce your CGT exposure through strategic advice.
Don’t risk penalties or confusion when it comes to reporting your Capital Gains Tax. Our team of expert accountants and tax advisers is here to ensure that you stay compliant with the 60-day reporting requirement and pay the correct amount of tax.
Whether you’ve sold a property recently or are planning to sell, we’re here to make the process easy and hassle-free.
Contact us today for a consultation and let us handle the tax details, so you can focus on what matters most.