Some UK taxpayers must report and pay Capital Gains Tax (CGT) within 60 days of disposing of UK residential property.
What is the 60-day rule?
The 60-day CGT reporting rules apply to UK resident and non-resident individuals, trustees, personal representatives, partners in partnerships and limited liability partnerships, and joint owners of property who are disposing of a UK residential property. UK residents need only submit this return where there is Capital Gains Tax (CGT) to pay, however non-residents must submit the appropriate form on any UK residential property disposal, whether tax is payable or not.
This rule only applies to disposals of residential properties which the taxpayer has a direct interest in, i.e. if they sell or gift a house, rather than those they have an indirect interest in, i.e. a disposal of company shares which hold residential property.
Some examples of situations where the 60-day rule may need to be followed include if you dispose of a:
- Rental property
- Property you have never lived in
- Holiday home
- Property you have lived in for some of the time in which you have owned it.
If you are selling your main residence, the 60-day rule should not be a concern, as long as you have lived in the property throughout the entire ownership period. The rules will not apply where no CGT needs to be paid on the disposal. Some examples of this include, where:
- Any gain is covered fully by exemptions or reliefs;
- The property is sold at a loss or no gain.
- The property disposal must also be reported on the self-assessment tax returns of those who fall within self-assessment with the appropriate tax paid shown.
How are disposals reported to HMRC?
Disposals can be reported to HMRC digitally via the Government’s website. In some limited circumstances, where HMRC accept that a disposal is unable to be reported digitally, a paper reporting form must be used.
How to pay the tax you owe on the disposal?
An estimate of the CGT due on the disposal must be paid, either through the taxpayer’s Government Gateway account or via bank transfer or cheque. In cases where a paper return is submitted, HMRC will provide a 14-digit payment reference starting with X which should be referenced when making payment.
What’s the deadline for reporting and paying CGT on the disposal?
The property disposal must be reported and the estimated CGT paid to HMRC within 60 days of the date of completion of the disposal, not the date of exchange of contracts. If the 60-day deadline is missed, late filing penalties may be charged, along with interest on any unpaid tax.
We are here to help
If you have any questions about the 60-day reporting rule or capital gains tax in general or assistance with calculating and reporting the gain, please get in touch.
Chris Ball
Tax Advisory
Chris.ball@azets.co.uk
