Selling a UK residential property that isn’t your main home?
If you sell a UK residential property that hasn’t been your only or main residence for the entire period of ownership, you may need to report a capital gain to HMRC and pay tax within 60 days of completion. These rules, introduced in April 2020 and tightened since, catch many property owners out, often because the deadline arrives long before a self assessment return is due.
Missing the reporting window can result in automatic penalties, even where little or no tax is ultimately payable.
What changed and who is affected?
Since April 2020, UK residents who dispose of a residential property and realise a chargeable gain must report it online and make a payment on account of capital gains tax (CGT).
This typically affects:
- Buy‑to‑let landlords
- Owners of second homes or holiday homes
- Individuals who have not lived in the property as their main residence throughout ownership
If the gain is not fully covered by private residence relief, allowable losses or the annual exempt amount, CGT is likely to apply.
When does a chargeable gain arise?
A chargeable gain may arise on the sale or disposal of a residential property where it:
- Was an investment property (such as a buy‑to‑let or holiday let), or
- Was a second home (for example, a holiday home or city flat), or
- Was only your main residence for part of the time you owned it
If, after taking reliefs and losses into account, any gain remains above the annual exempt amount, CGT will be due.
How do you report a residential property gain?
Where UK residential property gains are not fully exempt, they must be reported to HMRC using the CGT on UK Property service on GOV.UK.
Key points to be aware of:
- You must create a dedicated online CGT on UK Property account
- The gain must be reported within 60 days of completion for sales completed on or after 27 October 2021
- For sales completed between 6 April 2020 and 26 October 2021, the reporting deadline was 30 days
If the gain is correctly reported on a self‑assessment tax return before the reporting deadline, it does not also need to be reported via the online service.
Failure to report a gain on time results in an automatic £100 penalty, even if no tax is payable.
Paying CGT on account
In most cases, a payment on account of CGT must be made within the same deadline as the reporting requirement.
The amount payable is your best estimate of the tax due at that point, taking into account:
- The annual exempt amount (if not already used earlier in the tax year)
- Any allowable capital losses realised before completion
- Your expected rate of CGT
For residential property gains, CGT is charged at:
- 18% where total taxable income and gains fall within the basic rate band
- 24% where they exceed it
The gain is treated as the top slice of income when determining which tax band applies.
Payment is made via the same online CGT on UK Property account. Interest is charged where tax is not paid by the deadline.
What about your self‑assessment return?
The payment made within 60 days is not final. Your overall CGT position for the year is recalculated after the tax year end through your self‑assessment return.
If you make other disposals in the year, or if your income position changes, this can result in:
- A further liability, or
- A repayment of tax overpaid
Getting the initial estimate right can therefore make a meaningful difference to cash flow.
Common concerns we hear from property owners
- “My accountant already does my tax return – isn’t that enough?”
The reporting deadline often falls months before self assessment. Relying on year‑end filing alone can trigger penalties.
- “It’s only an estimate – does it really matter?”
Yes. Over‑ or underestimation affects cash flow and potential interest and HMRC expects reasonable calculations.
- “I don’t have time to deal with this alongside a property sale.”
Many people underestimate how soon the deadline arrives after completion.
How PEM can help
We regularly help UK property owners and landlords:
- Calculate chargeable gains accurately
- Submit CGT on UK Property returns on time
- Estimate tax liabilities correctly, reflecting available reliefs and losses
- Ensure property disposals are aligned with wider personal tax planning
Our proactive approach means no last‑minute surprises, no missed deadlines, and no unnecessary penalties.
Take the next step
If you are selling or have recently sold a UK residential property and want confidence that your CGT position is handled correctly, we’re here to help.
Speak to a PEM adviser today to ensure your property gain is reported on time and your tax position is optimised.
