The current rules state that capital gains on UK residential property have to be declared and the tax paid within 60 days of completion. This means it is essential to keep your accountant informed when you plan to sell a UK property.
Note: This does not apply to your home, which qualifies for principal private residence relief. This does not need declaring and doesn’t attract capital gains tax – providing it has been your residence for the duration of ownership.
Capital Gains Tax – What You Need to Know
If this tax applies to you, you will need the following information:
1. Capital Gains Tax on UK Property Reference Number
This is different to your self-assessment UTR and can be obtained using the following link: this link (Gov.uk Reporting and Paying Your Capital Gains Tax).
If you have previously sold any UK residential property under this regime, you don’t need another number as you will already have one.
Once you have your reference number, I advise you give this to your accountant so they can get the authorisation process underway and assist you in completing your return.
2. Costs
It is a good idea to get these together before the sale as sometimes the original purchase will have taken place many years before. Allowable costs in the sale will include the following:
- Cost of purchasing the property if it was bought
- Valuation of the property if it was gifted
- Probate value of the property, if it was inherited
- Details of any costs of purchase (usually on the completion statement)
- Costs of any significant improvements that haven’t been netted off against rental income, g. a new extension
- Costs of selling the property, g. estate agents fees, solicitors fees (usually on the completion statement)
3. Proceeds
This will be the amount you sold the property for. This is not necessarily the amount you received, as there could be agent fees which go in the ‘costs’ bracket or a mortgage that was redeemed.
4. Time living in the property
If you ever lived in the property as your principal residence you will be entitled to some relief. This is time apportioned, plus you get the last 9 months of ownership as deemed residence. For example, if you purchased the property in June 2015 and lived in it until July 2020, renting it out until you sold it in May 2025 and made a profit of £100,000 on selling it, then only £58,820 will be taxable rather than the full £100,000.
5. Tax payable
The tax payable is calculated as part of the return process, and to do this, you will need to estimate how much your normal income will be in that tax year. This will then determine how much of the capital gains tax will be chargeable at the higher rate (currently 24%, with the basic rate being 18%). There is also a £3,000 annual exemption that may be available depending on what other capital gains have been made in the year.
This tax payment is then due 60 days after completion.
If you do a self-assessment return, you will also need to put this information on your self-assessment return together with the amount of tax you have paid. This can then fine-tune the split between basic and higher rate capital gains due.
If you have any further queries on this, please contact your accountant.