Capital Gains Tax on Property: The 60-Day Rule Explained

The 60-day rule in one paragraph

When you sell (or gift) a UK residential property and capital gains tax is due, you must report the disposal to HMRC through a property CGT return and pay the tax within 60 days of completion. Not by the following 31 January, and not in your next tax return — within 60 days of the day the sale completes.

This catches people out because it inverts the usual rhythm of tax: instead of a bill many months after the event, the calculation has to be ready almost immediately. Solicitors handle the conveyancing, not the tax — many sellers only learn about the deadline after it has passed.

Who has to report — and who does not

• Selling your own home you have always lived in — usually no CGT and no 60-day return, because private residence relief exempts the full gain
• Selling a buy-to-let, second home or inherited property at a gain — CGT typically due, 60-day report required
• Selling a former home you later let out — often a partial gain after private residence relief, so a 60-day report is usually needed
• Gifting a property to family (other than a spouse or civil partner) — treated as a disposal at market value, so the 60-day rule can apply even though no money changes hands
• Selling at a loss, or with a gain fully covered by the annual exemption — generally no 60-day return needed for UK residents

The main-home exemption is the big one: private residence relief means most people selling the house they live in owe nothing. The rule exists for landlords, second-home owners and inheritors.

How the gain is calculated

The taxable gain is the sale proceeds less what the property cost you and the costs of buying, improving and selling it.

• Purchase price — or market value at the date of death for inherited property, or at the date of the gift for some gifted property
• Buying costs — stamp duty, legal fees and survey fees on the purchase
• Improvement costs — extensions, conversions and upgrades that added value (not repairs and redecoration, which belong against rental income instead)
• Selling costs — estate agent and legal fees on the sale
• Annual exemption — the first £3,000 of your total gains each tax year is tax-free

After the exemption, residential property gains are taxed at 18% within your remaining basic-rate band and 24% above it. Because the gain itself counts when working out which band applies, a large gain pushes most of itself into the 24% rate even for a basic-rate taxpayer.

Miss the deadline and the meter starts running

A late property return triggers an automatic £100 penalty, with further penalties as the delay stretches past three, six and twelve months — plus interest on the unpaid tax throughout. Because the amounts of CGT on property are often substantial, the interest alone can outgrow the penalties.

The practical answer is to involve your accountant before completion, not after. The figures — base cost, improvements, reliefs — can all be assembled while the sale is still going through, so the return is ready to file the week you complete.

Selling a property? Talk to us before you complete

Timing also matters before the sale: spreading disposals across tax years, using both spouses’ annual exemptions, and transfers between spouses beforehand can all legitimately reduce the bill — but only if arranged before completion.

Bayar Hughes & Co, chartered certified accountants in New Eltham, London SE9 since 1991, prepares 60-day property CGT returns as a core service. Bring us the sale details before you complete and the return, the reliefs and the payment will all be handled inside the deadline. Call +44 7441 347796.