When do I pay Capital Gains Tax?
The profit you make on selling a buy-to-let property or a second home is generally subject to capital gains tax (CGT). Also, you may have to pay some CGT on the profit you make from selling your main home if you have not lived in that property for the entire period of ownership. Any CGT arising on UK residential properties must be declared and paid within 30 days of the completion date of the deal. A ‘best estimate’ of the tax can be used if all the information needed to calculate the correct figure is not available. This will avoid penalties (see below), even if the actual tax turns out
to be a bit higher when you eventually submit amended figures.
The declaration must be made through your online UK Property Account.
This is a separate system to your online Personal Tax Account and it is not integrated with your annual self-assessment tax return. HMRC may tie up all three online accounts one day, but the UK Property Account was built solely to collect the tax due on the sale of residential property more quickly.
Once you have submitted details of the property sale (we can help you with this), HMRC will issue you with a reference number. You must use this
reference number when paying the CGT due, which needs to arrive with HMRC within 30 days of the completion date.
HMRC will demand a £100 penalty if the report of the sale is late. This penalty will increase where the delay in reporting is six months or more. Also, interest will be incurred on the unpaid CGT.
Those required to file a self-assessment tax return, because they have other gains or income to report, must declare the property gain once more. If you have no reason to file a self-assessment tax return, perhaps because all your income is dealt with through PAYE, then the 30-day return is sufficient to meet your reporting obligations.