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Tax Questions: Declaring Your Gain Correctly

CGT

Capital Gains Tax or CGT will generally be due when you sell a second home or investment property.

When you sell or transfer a UK residential property, you have to declare any gain through your UK Property Account. This report has to be made, and any capital gains tax due paid, within 60 days of completion date. It was 30 days for completions before 27 October 2021.

Declaring in your S-A return

Confusingly, you also need to declare the gain on your self-assessment tax return for the year, as the UK Property Account is not linked into your online tax return. You can offset the 60-day capital gains tax paid against your capital gains tax liability at the end of the year and reclaim any tax overpaid. LHP can help you with this process.

Capital gains tax on residential properties is payable at a maximum 28% rate, rather than the maximum 20% rate due on gains from other disposals. If the declaration of the gain from residential property ends up in the wrong box on your tax return, an insufficient amount of capital gains tax will have been paid.

HMRC is now chasing up taxpayers who inadvertently put their residential property gain in the wrong box or missed it off the tax return completely. Let us know immediately if you get a letter about your capital gains tax liabilities.

HMRC knows about all UK residential property sales as it has access to Land Registry records, updated when properties change hands. They are prompted to check for any declared gain when the purchaser pays Land Transaction Tax (LTT) (Stamp Duty Land Tax in England or similar land taxes in Scotland) when completing the deal.

Let’s Talk

When contemplating a disposal of UK residential property, speak to our tax specialists at LHP so that we can make sure you have all the information needed to report the gain and pay the tax on time to avoid penalties. Let’s Talk.

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