Selling residential property – is capital gains tax due?

Date posted: 20th Sep 2023

If you make a capital 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 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

The gain will need to be reported to HMRC electronically, in most cases. We have the ability to assist taxpayers with this reporting.

There are various items of information required, to calculate and report the capital gain, including:

  • 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;
  • sale proceeds;
  • the purchase price (or market value at acquisition where appropriate);
  • the cost of any improvements;
  • the buying and selling costs – legal, estate agents, SDLT etc.
  • any tax reliefs that apply (for example, main residence relief or lettings relief).
  • any unused capital losses from earlier years.
  • any capital gains in the same tax year as the disposal.
  • details of estimated income for the tax year of disposal.

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 the gain is reported to HMRC, a payment reference will be allocated. 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.

If you are required to file a 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.

As ever, as we are very experienced in capital gains tax matters, we are here to help.


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