Disposing of a property

Disposing of a property in the UK may trigger Capital Gains Tax (CGT) liabilities if the property is sold, gifted, or transferred to someone other than a spouse or civil partner.

UK residents are obligated to report any CGT liability and settle any due tax within 60 days of completing the sale if CGT is applicable. This reporting and payment must be made using HMRC’s digital UK Property Service and should also be declared on the individual’s Self Assessment tax return if necessary.

One-off disposals

For one-off disposals, individuals may not need to register for Self Assessment and submit a tax return. Instead, they can report and pay CGT using the new digital service. If there’s no tax liability, such as if a loss is incurred or if the gain is within the annual exemption allowance or other relief, no reporting is required.

Non-residents who dispose of property, regardless of its residential status, must report the disposal and settle any tax with HMRC within 60 days of completion, irrespective of whether tax is due or not.

To use the service, individuals must register for the digital service if reporting independently, or set up a Capital Gains Tax account with HMRC to authorize agents to act on their behalf.

The disposal date is determined by the date of contract exchange, while completion date marks the start of the 60-day period for reporting and paying CGT.

Failure to report or pay tax within the stipulated period may incur penalties and interest, similar to those under Self Assessment.

In case of estimated figures, individuals are encouraged to report within 60 days and can subsequently amend the return when actual figures become available, either through the digital service or on the Self Assessment form.

Multiple disposals

For multiple disposals within the same tax year, separate returns are necessary unless contracts and completions occur simultaneously. Losses from previous disposals can offset CGT liabilities, and overpaid tax can be reclaimed if a subsequent disposal results in a loss or if expected income for the tax year decreases significantly.

The new service provides detailed guidance and frequently asked questions to assist individuals and agents in complying with CGT reporting requirements, covering various scenarios, including disposal of residential property, use of annual exemption, disposal of land, trusts, and administration in deceased estates.