Capital Gains Tax owed on second property sales

Since the law surrounding Capital Gains Tax reporting changed in April 2020, anyone disposing of the whole or an interest in a second residential property must report the Capital Gain and pay any tax due within 30 days of the completion of the sale or the disposal of the property. For many of the disposals of residential property made in the UK each year, there will be no Capital Gains Tax liability due to Principal Private Residence (PPR) relief. However, in a situation where PPR relief does not reduce the tax liability to zero, the person making the disposal must report the Capital Gains Tax within the 30 day period. If they fail to do so, a fixed penalty is issued to them. This requirement also applies to trustees and executors in some cases. The returns must be submitted online, unless HMRC class the individual as being “digitally excluded”.

The online return process requires the person making the disposal to set up an online Government Gateway account as well as a Capital Gains Tax on UK Property account. The return can then be submitted using the online Capital Gains Tax reporting service and the tax can be paid once the return has been submitted. An agent can be nominated to complete this process on behalf of the person making the disposal if online authorisation is given.

The amount of Capital Gains Tax payable is dependent on the circumstances of the sale and the total amount of taxable income the person making the disposal receives. The Capital Gains Tax return can take into account the costs of any improvements made to the property during the period of ownership as well as the costs incurred in acquiring and disposing of the property, these costs can all be deducted from the gain. If the person making the disposal files an annual Self-Assessment Tax Return, the disposal must also be reported in their return for that tax year.

If you have disposed of, or are planning on disposing of any additional UK residential property, it’s important to establish quickly whether Capital Gains Tax applies to the disposal and whether it needs to be reported and the tax paid within 30 days. We can assist with submitting a Capital Gains Tax return online.

Anna Suchocki is Assistant Trust Manager in the Private Client team.

Suffolk Private Client Solicitors – for more information on our range of legal services, please call the team on 01473 611211 or email