If you are disposing of a residential property you may need to report the sale to HM Revenue and Customs.
This reporting regime, which is so often overlooked, was introduced on 6 April 2020 and became a requirement for UK residents selling a residential property after this date. If you are selling your main residence then the 60-day CGT regime should not apply if you have occupied the property throughout, however, this does apply if you are selling residential property that isn’t the main home in which you reside.
The requirement means that taxpayers must report any UK residential disposals to HMRC and pay an estimated Capital Gains Tax (CGT) liability. HMRC initially gave just 30 days from the date of completion (not the exchange of contracts) to report this, however, for completions on or after 27 October 2021, this was increased to 60 days.
It is a highly important requirement and failure to report will be met with HMRC’s penalty regime.
Who is required to report residential property disposals to HMRC?
The introduction of CGT reporting affects most UK tax residents, with the most common persons listed below:
Individuals
Joint owners of property
Partners in partnerships and limited liability partnerships
Trustees
Personal representatives/executors
If any of the above persons are within self-assessment, the disposal will also need to be included on the relevant tax return. Disposals of land, commercial property, and property located overseas are unaffected by the 60-day reporting requirements.
As well as UK tax residents, the reporting requirements also extend to non-UK residents who sell both UK residential AND non-residential property or land. Non-UK residents are required to report any disposal even if there is no tax to pay.
What disposals fall into the 60-day reporting regime?
The 60-day regime applies to a number of different types of UK residential property, with a few examples below:
Rental properties
Furnished Holiday Lettings
Properties which have been part lived in or never lived in
There are no requirements to report the disposal of the residential property to HMRC if:
The property is being sold at a loss;
The gain on the property is covered by your annual exemption or other reliefs such as Principle Private Residence relief
There is a transfer between spouses or civil partners
How to report UK residential property disposals?
Any disposals will need to be reported through the HMRC ‘Capital Gains Tax on UK Property’ account. Individuals will need to set up a Government Gateway account, if they don’t already have one, to register for the property account.
An individual can authorise an agent to act on their behalf to complete the reporting of the disposal to HMRC.
If you are thinking of, or currently in the process of disposing of a UK residential property, and would like to discuss the 60-day reporting requirements, please do not hesitate to contact your relationship manager or you can enquire through the link below and one of our tax advisors will be in contact.
