You probably have a lot on your plate if you’re in the process of selling a residential property in the UK. But one thing you can’t forget about is the requirement to tell HMRC about any Capital Gains Tax due on the sale within 60 days. 

This obligation applies any time you sell residential property other than your primary residence on which you make a capital gain, regardless of whether you’re an individual, trustee, partner, or joint property owner. 

It’s a relatively straightforward process, but failing to comply can result in severe penalties, as shown in the following two scenarios.

James, who isn’t aware of his obligation

James sold a rental property on 30 April 2024. He has prepared a tax return for several years and always provides information to his tax adviser in December following the end of the tax year.

He supplied his 2024/25 tax return information in December. He mentioned that he sold his rental property the previous April and expects a higher liability this year due to the Capital Gains Tax.

The adviser goes white as a sheet.

As it’s a residential property sale, the Capital Gains Tax was due 60 days after completion, on 29 June 2024.

The adviser calculates a £10,000 gain on the sale of the property. After the annual exemption, a Capital Gains Tax bill of £1,680 is submitted and paid to HMRC on 10 December 2025.

Unfortunately, that’s not the end of the matter. Because James reported and paid CGT late, HMRC charged penalties and interest totalling £2,035 on top of the Capital Gains Tax due. That’s a total CGT bill for James of £3,715.

Lilly who complies with the requirements

Compare this to Lilly’s scenario, who also sold her property in April 2024.

During the sale process, she told her tax adviser she was looking to sell the property. They advised that a Capital Gains Tax return would be due within 60 days of completion.  

They also discussed the plans for the sales proceeds. They were looking to gift them to their adult children and discussed whether a trust would provide additional benefits for asset protection and bloodline planning rather than an outright gift.

The sale went through on 30 April 2024. The adviser was ready to complete the Capital Gains Tax return using the completion information and submitted it to HMRC in May. Lilly immediately paid her Capital Gains Tax bill of £1,680.

Speak to your adviser when planning a sale

James paid over £2,000 on his property sale because he wasn’t aware of his obligations. I know which of the two property owners I’d want to be in this story. What about you?

There are numerous benefits to discussing potential property sales and other financial plans with your tax adviser, but when the sale of residential property is being undertaken the short deadline of 60 days and the penalties for missing that deadline can outweigh the tax due.

That’s why our team is always here to help. We can advise on all of your tax obligations and help with the preparing and filing of any returns. Speak to one of our experts today to find out more.