Reporting a residential property gain

A chargeable gain may arise on the disposal of a residential property which has not been the owner’s only or main residence throughout. This may be the case where the property is a second home or an investment property which has been let out.

Unlike other capital gains, residential property gains are not reported in the capital gains tax pages of the Self-Assessment return which must be submitted no later than 31 January after the end of the tax year. Instead, separate rules apply which govern how and when the gain is reported and the associated capital gains tax is paid.

Reporting the gain

A capital gains tax liability arising on the disposal of a UK residential property must be reported to HMRC within 60 days of the completion date. Where the property is jointly owned, each co-owner must report their own gain.

There is a dedicated online service for reporting residential property gains, and the seller will need to set up an account to report the gain and pay the tax. This can be done online at www.gov.uk/report-and-pay-your-capital-gains-tax/if-you-sold-a-property-in-the-uk-on-or-after-6-april-2020.

The following information is required:

·address and postcode of the property;

·date of acquisition;

·date of exchange of contracts on the sale;

·date of completion of the sale;

·purchase price (or market value where relevant);

·sale price (or market value where relevant);

·costs of purchase and sale;

·cost of any improvements; and

·details of any available tax reliefs or exemptions.

In the event that the seller is unable to use the online service to report the gain, they can instead contact HMRC and request a paper form.

Paying the tax

The capital gains tax due on the residential property gain must also be paid within 60 days of completion. This is the best estimate of the capital gains tax due at the time, taking account of any available annual exemption or capital losses. Capital gains on residential property gains are taxed at 18% to the extent that the seller’s income and gains do not exceed the basic rate band (£37,700 for 2026/27) and at 24% thereafter. The rates are now the same as for other gains.

Payment can be made online through the online account using a debit or corporate credit card or by approving a payment through an online bank account. Payments can also be made by bank transfer or by cheque. The 14-character capital gains tax payment reference should be quoted.

There may be an adjustment once the overall capital gains tax position for the year is known. For example, the realisation of losses later in the tax year may give rise to a repayment. The position will be finalised in the Self-Assessment tax return.

Interest and penalties

Interest and penalties will be charged where a taxpayer fails to report and pay capital gains tax on a residential property gain within the required 60-day window.