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If you own an investment property or a second home, consider selling. You can benefit from a strong housing market before the stamp duty land tax (SDLT) threshold for residential properties goes down in April 2025. Perhaps the favourable furnished holiday lettings regime no longer applies to you after April 2025, or you’re simply looking to realise a large gain while the higher capital gains tax (CGT) rate on residential property stays at 24%. Whatever your reason, there’s an incredible rule you must follow if you face a CGT bill: you have 60 days from the completion date of the sale to report your gain to HMRC and pay any tax due.
When Do You Owe CGT on a Residential Property?
You wouldn’t owe capital gains tax if the property you sold were your only or main home for the entire time you owned it. This is thanks to private residence relief, which typically wipes out any gain you might have made. But if the property was a second home, an investment property, or used for holiday lets, it’s likely you’ll owe some tax if there is a gain.
You may also have partial relief if you lived in the property for a while but rented it out or used it as a vacation home at other times. Even so, any part of the gain that isn’t covered by relief will be subject to CGT, which is taxed at different rates depending on your total income and other gains. For residential properties, the rates are 18% for gains that fall within your basic rate tax band and 24% for anything above that band.
The 60-Day Reporting Rule
If you do owe capital gains tax on a residential property, you must report the gain to HMRC within 60 days from the completion date of your sale. This rule also applies if you own the property jointly with someone else—both co-owners must submit separate reports to HMRC detailing their share of the gain.
Missing this deadline can lead to penalties and interest charges, so it’s vital to keep close track of the completion date and act quickly.
How to Report the Gain
HMRC provides an online system dedicated to reporting residential property gains. You’ll need to set up an account or log into your existing tax account, then enter the details of the sale. Some important information you’ll need includes:
- Property address and postcode,
- Date of acquisition (when you originally bought it),
- Dates of exchanging contracts and completing the sale,
- Purchase price (or market value, if relevant),
- Sale price (or market value, if relevant),
- Costs of buying and selling (like solicitor fees, stamp duty, etc.),
- Any improvements you’ve made,
- Tax reliefs or exemptions that might reduce your CGT bill.
If you can’t use the online service for any reason, you can call HMRC and request a paper form. But if you choose that route, be mindful of the time it might take to receive and submit it, especially if your 60-day deadline is coming up soon.
Paying Your CGT
In addition to filing the report, you also have to pay your CGT within the same 60-day window. This tax is based on your best estimate at the time, taking into account the annual exemption (if available) and any capital losses you want to claim against the gain.
You can pay electronically via HMRC’s online account using a debit card, corporate credit card, or direct bank transfer. If you pay by bank transfer or check, remember to quote the 14-character CGT payment reference so HMRC can apply your payment correctly.
At the end of the tax year, you’ll complete your Self Assessment tax return. If you have other gains or losses that change your overall CGT bill, you might need to make adjustments—either paying more if you underestimated or receiving a refund if you overpaid.
How We Can Help
Failing to accurately report and pay residential capital gains tax within 60 days can lead to penalties and interest, which no one wants. At Tax Accountant, we can assist by:
- Reviewing whether you owe CGT in the first place,
- Calculating your gain properly and ensuring you claim every available relief,
- Filing your report on time and advising you on payment options,
- Planning for future property sales or changes to legislation that might affect your tax position.
The key is to act quickly and stay informed. If you’re unsure about any step of this process or if you have multiple properties with different ownership patterns, our team of experienced tax professionals is here to guide you. Don’t leave it to chance—get in touch, and we’ll help you navigate this incredible rule with ease.