If you sell a UK residential property that is not your main home and a capital gain arises, you may be required to report the gain and pay the tax due within 60 days of completion.
This is done through HMRC’s dedicated Capital Gains Tax on UK Property service and is separate from your annual Self Assessment return.
Missing the deadline can result in automatic penalties and interest, even if the tax is later reported correctly on your tax return.
Why this catches so many people out
The rule is still widely referred to as the 30 day rule because that was the original deadline when it was introduced in April 2020.
The deadline was later extended to 60 days from October 2021, but many people are still familiar with the old timeframe or are simply unaware that a separate and immediate reporting obligation exists.
One of the most common ways people are caught out is by not realising the requirement exists until well after completion.
This often happens when their accountant asks about the disposal months later while preparing their annual tax return, by which point the 60 day deadline may already have passed.
Which property sales does this apply to?
The 60 day reporting rule applies to disposals of UK residential property where a chargeable gain arises.
Common examples include:
- Second homes
- Buy-to-let and rental properties
- Inherited property that is later sold
- Property that has been used for both residential and business purposes
It will generally not apply where the property is your only or main residence and fully qualifies for Private Residence Relief.
It may also not apply where the disposal results in a loss or where available reliefs mean that no Capital Gains Tax is payable, although the reporting position should still be checked carefully.
What you need to do and by when
The deadline runs from the date of completion, not the date contracts are exchanged.
You normally have 60 days from completion to:
- Calculate the capital gain
- Report the disposal to HMRC
- Pay any Capital Gains Tax due
The report is made through HMRC’s Capital Gains Tax on UK Property service.
You will usually need a Government Gateway account and may also need to set up a specific Capital Gains Tax on UK Property account.
The gain itself must be calculated carefully, taking into account relevant allowable costs such as acquisition costs, qualifying capital improvement expenditure and disposal costs.
The tax due may also need to be estimated based on your expected income for the tax year, as your final tax position may not yet be known at the time of the property sale.
What happens if you miss the deadline
Missing the 60 day deadline can result in an automatic late filing penalty.
Further penalties may apply depending on how long the return remains outstanding, and interest can also be charged on Capital Gains Tax that is paid late.
Because the deadline is calculated in calendar days from completion rather than from when you become aware of the obligation, it is possible to be several weeks late before realising that a return was required.
This can be particularly easy to overlook when the property sale takes place during an already busy or difficult period, such as a bereavement, divorce or major house move.
A practical point that is often missed
One of the most important parts of the process is calculating the actual taxable gain correctly.
Because the return has to be submitted relatively soon after completion, there is a risk of either overpaying tax by failing to claim allowable costs and reliefs or underpaying because the calculation has been rushed.
Potentially allowable costs can include:
- Legal fees connected with the original purchase
- Legal fees connected with the sale
- Estate agency fees
- Stamp Duty Land Tax paid when the property was purchased
- Certain professional fees directly related to acquiring or disposing of the property
- Qualifying capital improvements made during ownership
Routine repairs and general maintenance do not normally count as capital improvement expenditure for Capital Gains Tax purposes.
Where the property was your main residence for part of the ownership period, Private Residence Relief may also reduce the taxable gain.
Getting these figures right can make a significant difference to the final Capital Gains Tax liability.
How Artema can help
Because the reporting window is relatively short, it makes sense to seek advice as soon as a sale of a second home, rental property or other potentially taxable residential property is agreed.
Ideally, the Capital Gains Tax position should be reviewed before completion rather than after.
We can calculate the gain, identify relevant allowable costs and reliefs, complete the required property disposal return and help ensure the correct amount of tax is paid within the deadline.
We can also make sure the disposal is correctly reflected in your annual Self Assessment return so that the tax already paid is properly accounted for and there are no unnecessary discrepancies.
Frequently asked questions
Is it 30 days or 60 days to report capital gains on property?
The current reporting deadline is 60 days from completion.
The rule was originally introduced with a 30 day deadline in April 2020, which is why it is still sometimes referred to as the 30 day rule.
The deadline was extended to 60 days from 27 October 2021.
Do I need to report the sale of my main home for Capital Gains Tax?
Generally not if the property has been your only or main residence throughout your ownership and fully qualifies for Private Residence Relief.
If only part of your ownership period qualifies for relief, however, Capital Gains Tax may still be due and the reporting requirements should be checked.
What happens if I miss the 60 day deadline?
HMRC may apply a late filing penalty, with further penalties potentially arising depending on how long the return remains outstanding.
Interest may also be charged on any Capital Gains Tax paid late.
If you have already missed the deadline, it is generally sensible to deal with the outstanding return as soon as possible.
Do I still need to include the gain on my Self Assessment tax return?
Yes, where you are required to complete a Self Assessment return, the disposal may also need to be reported there.
The Capital Gains Tax already paid through the 60 day property reporting process should then be taken into account so that you do not pay the same tax twice.
Artema Limited assists individuals and landlords across Ringwood, Wimborne, Poole and Bournemouth with Capital Gains Tax reporting on property sales, including the 60 day HMRC reporting requirement.
Contact Artema on 01425 470044 as soon as a sale is agreed to avoid missing the deadline.