Introduction

Individuals, trustees and personal representatives may be required to file a standalone Capital Gains Tax (CGT) return and make a CGT payment within 60 days following the completion of a disposal of land or property (property in this context refers to real estate). 

This note provides a high-level overview of the reporting and tax payment requirements relating to CGT on disposal of land. Taxpayers may also have additional filing requirements, such as an annual Self Assessment tax return. This note does not detail the requirements of the Self Assessment tax return, though does refer to the regime where reporting may be required under both the CGT reporting and Self Assessment tax regimes.  

Date of disposal

The date of disposal of a property determines the tax year in which the gain should be taxed. The date of disposal is normally the date that contracts are exchanged (or the date of the satisfaction of the final condition in a conditional contract, where relevant). The date of completion, which may be later, determines when CGT returns must be filed and any tax due paid. The reporting and payment deadline is currently 60 days from completion (the 60 day deadline applies to completions on or after 27 October 2021. A 30 day deadline applied previously).  

CGT reporting and payment regime

UK residents

UK residents must file a CGT return if a CGT payment on account is due on disposal of UK residential property. No CGT will be due, and so no CGT return will be required, if the entire gain on disposal is relieved by Private Residence Relief (PRR), or if the property is sold at a loss. In circumstances where CGT does arise on the disposal of a property, the payment on account will normally be the full expected CGT liability, but may exceed it in some cases (see comments regarding loss offsets below).  

In determining the level of the CGT payment on account, capital losses realised on disposal of other assets on or before the date of completion of the property sale can, in principle, be taken into account. In practice, quantifying the available losses within the 60 day filing window may not be feasible. For example, CGT on a residential property disposal on 1 May 2023 (the 2023/24 tax year) is due by 30 June 2023 if completion was also on 1 May 2023. Losses brought forward from 2022/23 and earlier years might be available, but the figures may not be known by the CGT due date as the 2022/23 tax return is unlikely to have been completed (the filing deadline is 31 January 2024). Unless it is clear that there is no CGT payment on account due, the prudent position would be to submit a standalone return within the 60 day window, together with a payment on account of 28% of the chargeable gain. Interest and penalties may apply if returns are not submitted and insufficient payments are made, as set out below. 

Losses incurred after the date of completion must be ignored in determining the CGT payment on account, even if they will ultimately be offset on the self-assessment tax return for the tax year of disposal. Any excess CGT will generally be repayable when the self-assessment tax return is filed.

Non-UK residents

UK residents and non-UK residents are within the same regime, but there are some differences in how it applies. Notably, non-UK residents must file CGT returns on disposal of land and property within the scope of the reporting regime even if no CGT payment on account is due (subject to limited exceptions for ‘excluded disposals’, most notably transfers made to an individual’s spouse on a no gain no loss basis, which are not reportable). In addition, non-UK residents must also file returns and make tax payments in respect of disposals of non-residential UK property and interests in certain ‘property-rich’ companies as well as UK residential property. 

Self Assessment tax returns

Individuals, trustees and personal representatives who file Self Assessment tax returns must also include the disposal of the property on their Self Assessment tax returns. These are the annual tax returns due by 31 January following the end of the tax year, which contain details of both income and capital gains that arose in the tax year. 

Penalties

Specific automatic penalties apply to late filing of the standalone CGT return and late payment of the CGT liability. These apply to both UK and non-UK residents. The penalties are cumulative and can only be appealed if the taxpayer has a reasonable excuse for the failure. The key penalties are as follows:

Additionally, HMRC have the discretion to charge daily penalties of £10 per day up to a maximum of 90 days if the return is more than three months late. 

Interest will be charged if the tax remains unpaid after 60 days.

A separate regime applies to late filing of Self Assessment tax returns and associated late tax payments. This regime is not detailed in this note.