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If you make a chargeable gain on the sale of a UK residential property, you will need to report the gain to HMRC within 60 days of the completion date and pay tax on the gain within the same time frame. A chargeable gain may arise if the property that you sell has not been your only or main residence throughout the period that you owned it, or if it is a let property, for example a buy-to-let or a holiday let, or a second home. Where the property is jointly-owned, each co-owner is responsible for reporting their share of the gain and paying the tax that they owe.

Reporting the gain

You will need to use a Capital Gains Tax on UK property account to report the gain to HMRC online. You can access your account or set one up by signing into your Government Gateway account. If you are unable to report online, you can download a paper form (see www.gov.uk/government/publications/report-capital-gains-tax-on-uk-property). You can also obtain a paper form from HMRC. You should use the paper form rather than the online service if you have already submitted your tax return for the tax year in which the disposal occurred.

When reporting the gain, you will need to provide the following details:

  • the address and postcode of the property;
  • the date that you acquired it;
  • the date you exchanged contracts for the disposal;
  • the completion date of the disposal;
  • disposal proceeds;
  • the purchase price (or market value at acquisition where appropriate);
  • the cost of any improvements;
  • the buying and selling costs;
  • any tax reliefs that apply (for example, main residence relief or lettings relief).

If you are non-UK-resident, you must report all sales of UK property or land even if there is no tax to pay.

Paying the associated capital gains tax

After you have reported the gain to HMRC, you will be sent a letter containing a payment reference that starts with an ‘X’. You can also find the reference in your online Capital Gains Tax on UK property account. This should be used when paying the tax through the online tax payment service, or via online banking or by cheque. The tax must be paid within 60 days of completion.

The tax you will need to pay is the best estimate of the capital gains tax payable on the gain at that time. You will need to take account of other disposals in the tax year to date. You can make use of your annual exempt amount if this has not already been used, and also any losses for the current tax year and those brought forward from previous tax years.

When you file your tax return for the year, you will need to calculate your capital gains tax liability for the year as a whole. You may have further tax to pay if you have made gains on other assets. Alternatively, you may be due a refund if you have realised losses since paying the tax on your residential property gain.

Contact us

If you would like to speak to a member of our team about reporting residential property gains, we would be delighted to hear from you. You can get in contact by completing our contact form or calling our office 01326 660022.