Reporting UK residential property disposals

Did you know that if you are a UK resident who is looking to sell a residential property that you need to check if a capital gain arises and therefore extra paperwork and tax should be submitted and paid to HMRC within 60 days of completion?

Since 6 April 2020, UK residents are required to report capital gains from the disposal of UK residential property and pay the associated Capital Gains Tax arising within 60 days (30 days prior to 27 October 2021) of completion, using HMRC’s digital UK Property Service. Penalties are charged for late submission with interest accruing on late payments.

Key points to note include:

  • UK residents only have to report the gain when they have a liability, after taking account of deductions for reliefs, the annual exemption and capital losses arising before the disposal.
  • Disposals include sales, gifts and transfers to someone other than a spouse.
  • Examples likely to be reportable may include holiday homes, rental properties and properties which have not been the taxpayer’s home throughout the period owned.
  • UK taxpayers required to make a return include individuals, trustees, personal representatives, partners in partnerships, members of LLPs and joint owners of residential property.
  • Non-UK residents must report all UK property disposals to HMRC within 60 days of completion, whether tax is payable or not. Please see further details here.

To report a gain, a taxpayer must register for a Capital Gains Tax on UK Property Account with HMRC. Once registered, they can choose to report the gain themselves or appoint an agent to deal with the reporting on their behalf.

It is therefore important to think ahead of any residential property disposal, gather all relevant documentation for the purposes of calculating whether a capital gain arises before completion takes place. There are only 60 days thereafter to register, compute, report the gain and pay the capital gains tax to HMRC. Tempus fugit!