If you dispose of a UK residential property, the gain will have to be reported online to HMRC within 30 days of disposal. The date of disposal for this purpose is the date of completion.
A disposal could be a sale, a gift or a transfer.
The capital gains tax must be paid at the same time as the report is submitted i.e. within 30 days of the date of completion.
For property disposals by UK Residents between 6 April 2020 and 1 July 2020, the reporting date is extended to 31 July 2020. However the payment date is still 30 days following completion.
The capital gain on a sale of a residential property is calculated as
- Total proceeds
- less costs of disposal e.g. legal fees, agent fees
- less purchase price
- less costs of acquisition
But you do not need to submit a report if:
- the property was the main home of the taxpayer and qualifies for Private Residence Relief.
- the property is sold to a spouse or civil partner.
- the gain is below the annual exemption (£12,000)
- there is no capital gains tax to pay.
- the property was outside the UK.
- the property was sold at a loss.
- the date of exchange was before 6 April 2020.
Interaction with Self-Assessment
Taxpayers who are already in self-assessment must also be report the gain on the self-assessment tax return for the tax year in which the date of exchange falls.
E.g the date of exchange for a house is 31 August 2020. This is in the tax year 20/21 and needs to be included in the self-assessment tax return for that year.
The date of completion is 30 September 2020. The 30-day report and the capital gains tax is due within 30 days of the day of completion.
There are 2 scenarios where a taxpayer who is in self-assessment would not need to submit the 30-day report:
- The taxpayer submits their self-assessment return early after the end of the tax year and this falls before the 30-day period expires.
The date of completion is 1 April 2021. The disposal is in the 2020/21 tax year and the taxpayer submits his self-assessment tax return on 25 April 2021.
This is within 30 days of the date of completion so the 30-day report is not required.
The capital gains tax is due on the normal self-assessment due date. In this example it would be 31 January 2022.
- The period between the date of exchange and the date of completion is so long that the self-assessment due date falls before the end of the 30-day period.
The date of exchange is 1 April 2021. The date of completion is 15th January 2022.
The gain has to be reported on the self-assessment return for 20/21 which needs to be submitted by 31 January 2022. The capital gains tax is also due for payment on 31 January 2022.
As this falls within 30 days of the date of completion, no 30-day report is necessary.
Those who are not required to be in self-assessment (do not have other income/gains to declare), do not need to register for self-assessment just for the gain.
Amendments that have come to light after the date of disposal, can be reported via self-assessment.
There is a £100 penalty for failing to submit the report within 30 days of the date of completion. There are additional penalties if the report remains unsubmitted.
Please get in touch if you wish to discuss the potential tax issues regarding the disposal of your residential property.