Avoiding Penalties: Navigating the 60-Day Capital Gains Tax Reporting Rule for Property Sales
- TBA
- Jul 8
- 4 min read
In recent years, Capital Gains Tax (CGT) policies have become increasingly stringent.
The annual exemption has dropped significantly to £3,000, pulling many taxpayers into the CGT net for the first time. Furthermore, HMRC is strengthening its oversight through data matching and proactive correspondence, causing compliance risks to rise rapidly.
Meanwhile, as of 2026, tax compliance requirements have undergone a comprehensive overhaul. This includes a stricter penalty regime and digital reporting mandates such as Making Tax Digital (MTD).
For investors holding residential rental properties, there is a crucial requirement that is easily overlooked but highly likely to trigger penalties: the 60-day CGT reporting rule.
What is the 60-day CGT reporting rule?
Under current legislation, when you sell a residential property and a Capital Gains Tax liability arises, you must report and pay the tax within 60 days of the completion date. This rule applies to buy-to-let properties, second homes, non-main residences, and properties partially used as a main residence that still generate a taxable gain.
It is important to note that even if you already submit an annual Self Assessment tax return, the 60-day report must be completed separately. It cannot be combined with or replaced by your annual return.
For non-residents, similar but broader reporting requirements apply, covering both residential and non-residential properties, as well as direct and indirect disposals. If this applies to you, seeking professional advice is highly recommended.
Failing to report and pay within the 60-day window can result in late filing penalties, late payment interest, and an increased risk of an HMRC investigation.
Given current regulatory trends, HMRC actively uses data to identify unreported transactions and issues warning letters. Many taxpayers only realise there is a problem when they receive a notice from HMRC, by which time additional costs have already accrued.
Exemptions from the 60-day reporting rule
If a disposal does not result in a CGT liability, the 60-day reporting rule generally does not apply. Examples include 'no gain, no loss' transfers between spouses or civil partners, gains fully covered by exemptions or reliefs (such as the annual exemption or Private Residence Relief), gains offset by realised losses from previous years or the current year, and properties sold at a loss or with no gain.
Therefore, if you are selling your only or main residence and have lived in it for your entire period of ownership, you generally do not need to submit a 60-day report.
Furthermore, reporting is not required for commercial leases granted to unconnected parties with no premium, disposals made by charities, disposals of pension investments, or disposals of properties belonging to a trading business (which are subject to Income Tax rather than CGT).
How to calculate Capital Gains Tax
When submitting a 60-day report, you typically need to perform an initial tax calculation to estimate the CGT payable. This calculation should factor in the annual exemption, which has been £3,000 since the 2024/25 tax year, and deductible capital losses, including losses generated before the disposal and losses carried forward from previous years.
However, you cannot use losses that occur later in the current tax year to reduce the immediate tax payable. You may reasonably account for expected tax reliefs where applicable.
A submitted report can be amended, but it cannot be adjusted for events occurring after the completion of the transaction, nor can it be modified after the annual tax return has been submitted. The final tax position is confirmed in your annual Self Assessment and adjusted based on actual circumstances, such as subsequent losses. If the tax paid in advance falls short, interest may be charged.
Common pitfalls to avoid
In practice, we find that the 60-day reporting obligation is most frequently missed in the following scenarios:
Telling the accountant only at year-end: Many clients are accustomed to mentioning transactions during their annual tax return preparation, but by this time, the 60-day deadline has usually passed.
Assuming main residences are automatically exempt: If the property was not occupied as your main residence for the entire period of ownership (for instance, if it was let out or used as a second home), a CGT reporting obligation may still arise.
Believing a Self Assessment return is sufficient: Simply reporting the sale in your annual tax return can still be treated as a late 60-day submission.
Confusing the completion date with the exchange date: The 60-day period begins on the completion date of the transaction, rather than the date contracts are exchanged.
Forgetting that CGT must be paid immediately: The CGT arising from the sale must be paid alongside the 60-day report. It cannot be deferred until the 31 January deadline for your annual tax bill.
The view from TB Accountants
If you are planning to sell or gift a residential property, consulting a professional adviser as early as possible will help you plan your taxes and ensure compliant reporting. If the property sale results in a loss, although a 60-day report is not strictly required, voluntarily reporting it may help confirm and utilise that loss. If there is a gain, you might consider realising a capital loss prior to the sale to reduce your overall tax burden.
Additionally, if you are unsure of your tax residency status, you should confirm it promptly, as different statuses dictate different reporting rules. After the end of the tax year in which the disposal occurs, reviewing your overall tax position is sensible, as there may be opportunities for a tax refund.
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