Capital Gains Tax is the tax you pay on the profit when you sell or otherwise dispose of an asset. For UK property, residential means a building used or suitable as a dwelling, plus its garden or grounds. A 60-day UK property return is an online report – and a payment on account – due within 60 days of completion on certain disposals. This guide explains how the rules work in practice, what to file and when, and the reliefs and planning points that can materially reduce your bill.
Who pays CGT on UK property and what counts as a disposal
CGT applies to individuals, trustees, and personal representatives. Companies do not pay CGT; they compute gains under Corporation Tax, with indexation frozen from December 2017. For UK rental property, a disposal includes a sale, gift, transfer, or exchange, so gifting a buy-to-let can still create a taxable event even if no cash changes hands.
Classification shapes both rates and reporting. Non-residential property and mixed-use assets (for example, a shop with a flat) are not residential for CGT rate and 60-day reporting purposes. That classification drives the percentage you pay and whether the 60-day regime applies.
Dates that lock in your tax rate and your filing clock
The disposal date is the exchange date if contracts are unconditional. That date fixes the tax year, the rates, and your annual exempt amount. If contracts are conditional, the disposal date is when the condition is met. The 60-day filing and payment clock, however, starts at completion.
This split creates planning and cash flow choices. Exchanging near the tax-year boundary can move you into a different annual exempt amount or rate environment, while completion fixes your 60-day deadline. If you are negotiating a sale and purchase agreement, align legal longstops and completion timing with your tax year strategy.
Current rates, allowances, and who must file within 60 days
Rates and allowances remain the foundation of the computation, and they differ for residential and non-residential gains.
- Residential rates: From 6 April 2024, individuals pay 18% on residential property gains within their unused basic rate band and 24% above it.
- Non-residential rates: Gains on commercial or mixed-use property are charged at 10% or 20% depending on your income band.
- Annual exempt amount: The exemption is £3,000 for 2024/25. Most trusts have £1,500, shared across same-settlor trusts.
- Trustees: Trustees generally pay at the higher residential rate on gains not covered by reliefs.
Not everyone needs to use the 60-day system. HMRC’s rules split by both property type and residence status.
- UK residents: File and pay within 60 days only for disposals of UK residential property and only if CGT is due after reliefs and the annual exemption. You do not file a 60-day return where Private Residence Relief fully shelters the gain, or where losses and the annual exemption eliminate the charge.
- Mixed-use and commercial: UK residents report these disposals only via Self Assessment; the 60-day return does not apply.
- Non-residents: File within 60 days for all UK property disposals – residential, commercial, and qualifying indirect disposals – whether or not tax is payable. Pay within 60 days if there is tax to pay.
- Trustees and personal representatives: Follow the same resident or non-resident split as individuals.
Penalties, interest, and HMRC enquiry windows you can avoid
Missing the 60-day filing deadline triggers a £100 penalty. At six months and twelve months late, HMRC adds the higher of £300 or 5% of tax due at each point. Interest runs from the day after the 60-day deadline. HMRC can also apply late payment penalties at 30 days, six months, and twelve months.
HMRC can open an enquiry within twelve months of a valid return. Discovery assessments are generally within four years for normal cases, six years for careless errors, and twenty years for deliberate behavior. Complete and well-documented computations reduce the risk of extended discovery.
Step-by-step: compute your gain correctly the first time
Most computations follow the same structure. Start with net sale proceeds and then deduct allowable amounts.
- Incidental sale costs: Deduct agent fees and legal costs directly tied to the disposal.
- Base cost: Deduct what you paid originally, plus SDLT and legal costs at acquisition.
- Enhancement spend: Include capital improvements reflected at disposal, like extensions and structural works. Routine repairs are revenue, not capital, and do not reduce the gain.
- Fixtures and allowances: Where a section 198 election exists or capital allowances were claimed on fixtures, avoid double counting. Exclude amounts already relieved by capital allowances from the CGT base cost.
As a rule of thumb, if the expenditure adds to or improves the asset and is still part of it at sale, it is more likely to be enhancement. Keep line-item invoices and evidence.
Reliefs that meaningfully reduce the bill
Reliefs can significantly change the outcome. Map eligibility before exchange to preserve options.
- Private Residence Relief: PRR applies to periods the property was your only or main residence, plus the final 9 months automatically. It is time-apportioned and reduces the chargeable portion of the gain.
- Letting relief: Since April 2020, letting relief applies only where you shared occupancy with the tenant during the let. It is limited to the lowest of the PRR amount, £40,000, or the gain attributable to the shared-occupation letting period.
- Spouses and civil partners: Transfers between spouses living together are no gain/no loss. Transfer before exchange to reallocate gains and use both annual exemptions and rate bands. If you also transfer debt, confirm any SDLT implications with your conveyancer.
- Non-resident rebasing: Non-resident individuals can rebase residential property to 6 April 2015 and non-residential to 6 April 2019, or elect time-apportionment or whole-period basis. Choose the lowest gain and support valuations with robust evidence.
Losses, allowance ordering, and Self Assessment interaction
Ordering matters for a clean result. Offset brought-forward losses first, then in-year losses realized before filing the property return. Apply the annual exemption to any remaining gains. For the 60-day payment, use reasonable estimates of other gains, losses, and income; reconcile later through Self Assessment with any refund or top-up.
If you file Self Assessment, also include the disposal for the tax year of exchange. The 60-day amount is a payment on account. If you do not usually file Self Assessment and the only trigger is a property disposal on a valid 60-day return, HMRC may not require a full return, although it can still request one.
Residential vs mixed-use: a classification that changes rate and cash flow
Getting the classification right saves both tax and headaches. Residential means a building used or suitable as a dwelling. Mixed-use is non-residential for both the rate and the 60-day regime. For example, a shop with a flat on one title is mixed-use for a UK resident seller – you report via Self Assessment and pay at 10% or 20% depending on your income band, with no 60-day return.
Splitting titles in a portfolio can alter classification and rates, but it can add HM Land Registry title work, SDLT, and legal steps. Substance matters more than form. Do not split purely for tax if the underlying use remains the same.
Non-residents: scope, indirect disposals, and temporary non-residence
Individuals who are non-resident are within UK CGT on direct disposals of UK land and on indirect disposals of property-rich entities. Broadly, an entity is property-rich where 75% or more of gross asset value is UK land and the seller holds at least a 25% interest. The 60-day regime applies to both situations, and the annual exemption is available.
Temporary non-residents may still be taxed on gains realized while away if they return within five complete tax years. Where temporary non-residence features in planning, seek tailored advice and assemble contemporaneous evidence on residence days, ties, and intentions.
Companies and wrappers: when Corporation Tax rules apply
UK and non-UK companies are taxed under Corporation Tax on UK property gains. Non-resident companies moved to Corporation Tax for gains from 6 April 2019 and for UK property income from 6 April 2020. The 60-day return does not apply to companies. Corporate structuring decisions turn on CT rates, interest limitation rules, ATED, and non-tax considerations when using SPVs or setting up at Companies House.
Worked example 1: UK resident sells a former home now let
Facts: Bought 1 June 2012 for £300,000; SDLT/legal £6,000. Lived there to 31 May 2016 (48 months), then let; capital improvements £30,000 in 2018. Exchanged 15 August 2024; completed 30 September 2024; sold for £600,000; selling costs £10,000. No other gains or losses; annual exemption £3,000; higher-rate taxpayer.
Computation: Net proceeds £590,000. Base cost £306,000; enhancements £30,000. Gain before PRR £254,000. Ownership June 2012 to September 2024 equals 148 months; occupation 48 months; final 9 months deemed. PRR months 57; PRR fraction 57/148 (about 38.51%); PRR about £97,822. Chargeable gain about £156,178. After the £3,000 annual exemption, taxable gain about £153,178. CGT at 24% about £36,763.
Compliance: 60-day return and payment due by 29 November 2024. Also report on 2024/25 Self Assessment (exchange date governs) by 31 January 2026 for reconciliation. Observation: Adding a spouse to title before exchange could access two annual exemptions and more basic rate band if available. Manage any SDLT on debt transfer with your conveyancer.
Worked example 2: Non-resident with 2015 rebasing
Facts: Acquired 1 March 2010 for £400,000; SDLT/legal £8,000; always let. RICS value at 5 April 2015: £520,000. Post-2015 improvements: £20,000. Exchanged 1 June 2024; completed 1 July 2024; sold for £800,000; costs £12,000. Annual exemption £3,000.
Rebased method: Net proceeds £788,000. Rebased cost £540,000 (2015 value plus improvements). Post-2015 gain £248,000. After annual exemption £245,000 taxed at 24% (assuming higher rate) gives about £58,800. Compliance: 60-day return and payment due by 30 August 2024. If time-apportionment produces a lower gain than rebasing, elect it and keep the valuation file.
Worked example 3: UK resident sells mixed-use building
Facts: Shop with flat above, one title; always let on separate tenancies. Exchanged 15 October 2024; completed 30 November 2024; sold for £1,200,000; base cost £800,000; costs £24,000.
Computation: Net proceeds £1,176,000; gain £376,000; annual exemption £3,000; taxable about £373,000. Mixed-use rates: 10% or 20%. Assume higher-rate: 20% of £373,000 equals about £74,600. Compliance: No 60-day return. Report via Self Assessment for 2024/25 and pay by 31 January 2026. That deferral is a cash flow advantage versus residential exits.
A repeatable process you can run on every deal
- Before exchange: Confirm classification, residence status, reliefs, and whether a 60-day return will be required. For non-residents with pre-2015 or -2019 ownership, commission valuations early.
- At exchange: Lock the tax year. Complete any spousal transfers or beneficial interest shifts before exchange if you want them to count.
- Between exchange and completion: Assemble base cost and enhancement evidence. Draft the computation and property return. Estimate full-year income to determine rate band usage and potential Section 24 impacts.
- At completion: Start the 60-day clock if relevant. Make sure your UK Property Account is set up to file and pay.
- Post-completion: File and pay within 60 days. Schedule Self Assessment reporting. Track later losses or income changes and amend if beneficial within the permitted window.
Quick kill tests before you exchange
- 60-day trigger: Is a 60-day filing required? UK residents only if UK residential property and tax is due; non-residents always file.
- Tax-year lock: Are you using the exchange date for the tax year? That date sets your rates and annual exemption.
- PRR eligibility: Is PRR in play for periods of main residence plus the final 9 months? Letting relief now needs shared occupancy.
- Mixed-use status: Is it mixed-use? If yes, there is no 60-day return for UK residents and non-residential rates apply.
- Non-resident basis: For non-residents, have you chosen the cheapest computation method and backed valuations?
- Spousal timing: For spouses, did transfers complete before exchange, with lender consent and Land Registry updates?
Edge cases to watch and how to document them
- Conditional contracts: The disposal date is when conditions are satisfied; longstops can move tax years.
- Losses vs exemption: Do not waste the annual exemption by overapplying losses where they would otherwise reduce higher-rate gains.
- Fixtures interplay: Section 198 elections and capital allowances reduce CGT base cost; avoid double relief by tying amounts to invoices and elections.
- Temporary non-residence: Gains taken offshore can be taxed on return within five complete tax years.
- Financing frictions: Inter-spousal transfers with debt may trigger SDLT. Incorporations need a genuine business level of activity.
Deadlines, amendments, and practical filing tips
For disposals on or after 27 October 2021, file and pay within 60 days of completion. You can amend the property return within HMRC time limits, typically within 12 months after the Self Assessment filing deadline for that year. Use amendments to reflect later losses, corrected income estimates, or valuation updates, and remember final reconciliation occurs through Self Assessment with interest adjustments as needed.
Two filing tips often save time and interest. First, set up your UK Property Account and verify identity well before completion; portal setup can take days for some sellers. Second, non-residents should arrange UK Faster Payments or a local currency-to-GBP transfer in advance, as international banking cutoffs can push you past the 60-day window. If you are managing multiple disposals, lock dates deliberately using the guidance above to spread gains across tax years.
What not to assume
- Letting relief rarity: Letting relief rarely applies post-2020 because shared occupancy is required.
- No PRR for pure lets: PRR does not cover buy-to-lets never occupied as your main residence.
- FHL changes: Furnished Holiday Lettings rules are slated for abolition from 6 April 2025; plan exits without assuming prior advantages.
Governance and evidence that win HMRC enquiries
Keep completion statements, tax records, legal invoices, and agent fee notes. Retain enhancement documentation such as itemized invoices, proof of payment, photos, and building control approvals. For non-resident rebasing, keep signed RICS valuations at 5 April 2015 or 2019 with the supporting files. Hold records for at least six years; keep valuation files longer given extended discovery windows. For extra integrity, hash final computations and valuation reports and keep a checksum log.
Lenders, buyers, and investors: what to ask for
- CGT pack: Ask for the seller’s CGT computation and evidence pack covering base cost, enhancements, and classification. This reduces completion risk and supports future base cost claims.
- Valuation support: Where non-resident rebasing features, request the 2015 or 2019 RICS reports and comparable schedules. Assume HMRC will test aggressive positions.
- Portfolio schedule: For multi-asset deals, request a schedule segregating residential vs non-residential assets and title configuration to validate rates and 60-day triggers.
For deal timing and execution logistics, coordinate exchange and completion sequencing alongside tax-year impacts. This planning sits neatly with a disciplined pre-completion checklist, such as the one used in our exchange-to-completion timeline.
Finally, if you are modeling proceeds and taxes across a pipeline of exits, tie your cash tax assumptions to realistic settlement dates and embed sensitivity on residential vs mixed-use classification. For portfolio sellers, an internal kill test can help decide the optimal exit order and improve net proceeds – a technique borrowed from structured disposals in corporate transactions and discussed in transfer tax planning frameworks.
Conclusion
UK property CGT turns on three practical levers: accurate classification, the exchange date that locks your tax year, and a timely 60-day return when required. If you organize documents early, choose the lowest lawful basis, and align dates with your allowances, you will lower tax, eliminate penalties, and simplify HMRC interactions.