Selling property can be extremely profitable, but it does bring tax along with it. Among the most important is reporting on a Capital Gains Tax (CGT) return to HMRC. If you are a landlord selling a buy-to-let or selling a second home, you should be aware of your reporting obligation.
If you don’t know how to go about this, there is no need to worry, for you aren’t the only one. Most UK taxpayers often put it off or forget to do so, only to find themselves with penalties and charges in the end. This is an easy-to-follow guide to keep you compliant.
What is Capital Gains Tax and Who Has to Pay?
Capital Gains Tax applies when you sell an asset for more than what you paid for it, minus the allowable expenses. It typically applies to second homes, buy-to-let properties, and inherited property, but not your primary residence.
If you’re a UK resident selling residential property that isn’t your usual home—or a non-resident selling UK property—you may be required to file a CGT return. Main homes are generally exempt due to Private Residence Relief.
When and How to File CGT Return
HMRC requires you to pay and report the CGT within 60 days after the date of completion of sale. This is a very short period and is equally applicable to both UK and non-UK residents. Missing this deadline means a penalty of £100, with the amount liable increasing the longer the delay.
To report, you’ll need to use HMRC “Capital Gains Tax on UK property” online. If you don’t already have one, you’ll need to register for a Government Gateway account and open a CGT property account.
Step-by-Step Reporting Instructions
Start by logging into your CGT property account. Gather information such as:
- Address and property type
- Sale and purchase date
- Original purchase price and sale price
- Legal and estate agent fees
- Improvement costs (not repairs)
- Any reliefs you’re due
Use UK Property Accountants’ or HMRC’s online calculator if you’re not sure how to calculate the gain. Once finished, you can pay directly through the portal using bank transfer or card.
Why Accuracy Is Important
Errors in your CGT return can cost you money. Overestimating your gain might mean you pay more tax than you have to, while underestimating might mean penalties or even investigations.
If your tax case is complicated—maybe due to joint ownership, foreign residence, or forgotten reliefs—it’s well worth seeking the advice of a tax advisor. Their expertise will help reduce your liability legally while keeping you on the right side of the authorities.
How UK Property Accountants Can Assist
UK Property Accountants offers individualised assistance for individuals and companies handling property tax. From determining gains and claiming reliefs to submitting your return, their team makes it easy.
With comprehensive knowledge of UK tax laws and experience covering residential and commercial property, they ensure your returns are accurate, timely, and efficient.
Conclusion
The 60-day limit for the CGT return can catch sellers off guard. But knowing your CGT obligations and preparing to file early makes the process smoother.
If you don’t know what you’re doing or don’t feel like taking a risk at making errors, professional help is an investment well worth making.
