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Selling a second residential property – what are my CGT reporting obligations?

If you sell a second residential property, did you know that it may need reporting to HMRC and CGT tax paid within 60 days of the sale?

What do I need to do if I sell a second residential property?

New HMRC reporting requirements came into force in April 2020. If you’re an individual, selling a residential property and make a capital gain, capital gains tax (CGT) is payable. You must report the gain to HMRC and pay any tax due within 60 days. The rule only applies to residential property (not commercial) and to individuals, (not companies). It was previously 30 days, but for property sales completed on or after 27 October 2021, it has been extended to 60 days.

How do I report the gain?

In order to report the gain to HMRC, a ‘capital gains tax on UK property account’ must be set up with HMRC. Once set up, your return can be completed and submitted on your online account.

How do I know if tax is due?

To determine if CGT is due, a capital gains tax calculation must be prepared. If there is a taxable gain, the applicable tax rate must be determined and tax calculated based on that. This will be either 18% or 28% depending on other income you have within the reporting tax year.

What happens if I don’t report?

Failure to report to HMRC and pay tax due within the required timeframe will result in both penalties and interest being applied.

  • A penalty of £100 if the return is not filed within 60 days.
  • A further penalty of £300 or 5% of any tax due, whichever is greater, if the deadline is missed by more than 6 months
  • A further penalty of £300 or 5% of any tax due, whichever is greater, if the deadline is missed by more than 12 months
  • Penalties will also be applied to late payments of tax due

Key Points

  • An online ‘capital gains tax on UK property’ return must be made within 60 days of completion of each property disposal
  • The gain must still be reported on your end of year self-assessment tax return
  • If the property is owned by more than one person, a return is required for each individual
  • This reporting does not apply to capital gains on overseas properties
  • If you are not registered for self-assessment, you will need to register for the tax year in which the gain is made, to complete requirements for end of year reporting
  • Penalties are applied to late returns and to late payments

HMRC guidance can be found here.

How can CFW help

At CFW we have specialist knowledge and can take care of this for you.

  • Calculating the gain on your property, using all of the tax relief that applies to your property sale
  • Preparing and filing the property return on your behalf,  advising you of any tax that is payable
  • Registering you for self-assessment if you are not already registered
  • Completing your end of year self-assessment return

For a no-obligation quotation, please get in touch here

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