Declaring your gain correctly
Capital Gains Tax (CGT) will generally be due when you sell a second home or investment property.
When you sell or transfer a UK residential property, you must declare any gain through your UK Property Account. This report must be made, and any CGT due paid, within 60 days of the completion date. (It was 30 days for completions before 27 October 2021).
Confusingly, you must also declare the gain on your self-assessment tax return for the year, as the UK Property Account is not linked into your online tax return. You can set off the 60-day CGT paid against your CGT liability at the end of the year and reclaim any CGT overpaid. We can help you with this process.
CGT on residential properties is payable at a maximum rate of 28%, rather than the maximum 20% rate due on gains from other disposals. If the declaration of the gain from residential property ends up in the wrong box on your tax return, an insufficient amount of CGT will have been paid.
HMRC are now chasing up taxpayers who inadvertently put their residential property gain in the wrong box or missed it off the tax return completely. Let us know immediately if you get a letter about your CGT liabilities
HMRC will know about all residential property sales as it has access to the Land Registry records, which are updated when a property changes hands. It will also be prompted to check for any declared gain when the purchaser pays Stamp Duty Land Tax (or similar land taxes in Scotland or Wales) when completing the deal.
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| Where you are contemplating a disposal of UK residential property, speak to us in advance so that we can make sure you have all the information needed to report the gain and pay the tax promptly, thus avoiding penalties. |