March 21, 2025September 5, 2025Capital Gains TaxMerranti

Capital Gains Tax (CGT) on Residential Property Sales: Reporting and Payment Guide

Selling a residential property that is not your main home can result in Capital Gains Tax (CGT). Whether you are selling a buy-to-let property, a second home, or an inherited property, it is important to understand the reporting deadlines, payment requirements, and tax-saving opportunities to avoid penalties and unnecessary tax liabilities.

This guide covers:

When CGT applies to property sales
How to calculate and report the gain
The 60-day CGT reporting rule
Tax rates and payment deadlines
Strategies to reduce CGT liability

1. When Does Capital Gains Tax (CGT) Apply to a Property Sale?

CGT applies when selling:

A buy-to-let property
A second home
A holiday home
An inherited property that was not the seller’s main residence

CGT does not apply when selling:

A main home, provided it qualifies for Principal Private Residence (PPR) Relief
A property transferred to a spouse or civil partner, which qualifies for no gain, no loss rules

Capital Gains Tax When Selling Property – HMRC

2. 60-Day Reporting Rule for Property Gains

If CGT is due on a residential property sale, the seller must report the gain and pay the tax within 60 days of completion.

Who Must Report?

UK residents selling a UK residential property where CGT is due
Non-UK residents disposing of UK land or property (even if no CGT is due)

Failure to report within 60 days results in penalties and interest.

How to Report a Property Gain

Set up a “Capital Gains Tax on UK Property” account on HMRC’s online portal.
Submit the CGT report within 60 days of completion.
Pay the estimated tax liability within 60 days.

Report and Pay CGT on UK Property – HMRC

3. What Information is Needed to Report CGT?

Before reporting the property gain, ensure you have the following details:

Property address and postcode
Date of acquisition
Date of exchange and completion for sale
Purchase price (or market value for inherited/gifted properties)
Sale price (or market value if gifted to a connected person)
Enhancement costs (capital improvements such as extensions or renovations)
Buying and selling costs (stamp duty, legal fees, estate agent fees)
Details of any CGT reliefs or exemptions (PPR Relief, Lettings Relief)

If the property is jointly owned, each owner must report their share of the gain separately.

4. How to Calculate CGT on a Property Sale

CGT is charged on the profit made from selling the property, calculated as:

Sale Price – (Purchase Price + Costs + Allowable Expenses) = Chargeable Gain

Example Calculation (UK Resident Seller, 2024/25 Tax Year)

Property Purchase Price: £200,000
Sale Price: £350,000
Capital Improvements: £20,000 (extension added)
Buying & Selling Costs: £10,000 (stamp duty, legal fees, estate agent fees)
Annual Exempt Amount: £3,000
Taxable Gain: £350,000 – (£200,000 + £20,000 + £10,000) = £120,000

Tax Due at CGT Rates for Residential Property (2024/25)

18% on gains up to the basic rate threshold (£50,270 of total taxable income + gains)
24% on gains exceeding the basic rate threshold

Final CGT Due:

First £50,270 at 18% = £9,048
Remaining £69,730 at 24% = £16,735
Total CGT Due: £25,783

5. CGT Payment Deadlines and Refunds

When to Pay CGT on a Property Sale

Within 60 days of completion (initial estimated payment)
Final tax calculation confirmed through self-assessment tax return

What If You Overpay or Underpay?

Overpayments can be refunded after submitting the self-assessment return.
If additional tax is due, it must be paid by 31 January following the tax year-end.

Example:

A property is sold in June 2024.
CGT must be reported and paid by August 2024.
If further CGT is owed, the final balance is due by 31 January 2026.

6. How to Reduce CGT on Property Sales

1. Claim Private Residence Relief (PPR Relief)

If the property was a main home for part of ownership, PPR relief reduces CGT.
Last nine months of ownership are always exempt, even if it was rented.

Private Residence Relief – HMRC

2. Use Lettings Relief (If Applicable)

Available if the property was your main home and later rented out.

3. Offset Losses

If other assets were sold at a loss, they can be offset against the property gain.
If the property was sold at a loss, report it on the self-assessment tax return to use in future years.

4. Time the Sale Wisely

Selling in a lower-income tax year may result in more of the gain being taxed at 18% instead of 24%.

5. Transfer Property to a Spouse or Civil Partner

Transfers between spouses and civil partners are CGT-free.
This allows gains to be split across two personal allowances (£3,000 each).

Transfers Between Spouses and Civil Partners – HMRC

7. Key Takeaways: Avoiding CGT Pitfalls

Report and pay CGT within 60 days of completion to avoid penalties.
Use PPR and Lettings Relief to reduce taxable gains.
Factor in enhancement costs, purchase/sale expenses, and annual exemptions.
If losses occur, record them on the self-assessment tax return for future use.
Plan property sales strategically—lower-income years or spouse transfers can minimise tax.