How does the 60 day Capital Gains Tax rule work for property sales?

At Towerstone Accountants we provide specialist property accountant services for landlords property investors and individuals dealing with property tax and reporting obligations across the UK. This article has been written to explain How does the 60 day Capital Gains Tax rule work for property sales in clear practical terms so you understand how the rules apply in real situations. Our aim is to help you make informed decisions avoid costly mistakes and know when professional advice is worthwhile.

As a chartered accountant running my own firm, the 60 day Capital Gains Tax rule is one of the biggest sources of stress and surprise for property owners. I regularly speak to landlords and individuals who sold a property, assumed the tax would be dealt with through their normal Self Assessment return, and only discovered months later that they had already missed a critical deadline. By that point, penalties and interest have often already started to accrue.

The 60 day Capital Gains Tax rule fundamentally changed how and when tax is paid on UK residential property sales. It applies regardless of whether you are a seasoned investor or selling a single rental property for the first time. In this article, I want to explain clearly and practically how the 60 day rule works, who it applies to, what must be reported, how much tax must be paid, and the common mistakes I see HMRC penalise. This is written exactly how I explain it to clients, in clear UK English, and based on real HMRC practice rather than theory.

What the 60 day Capital Gains Tax rule actually is

The 60 day Capital Gains Tax rule requires individuals to report and pay Capital Gains Tax shortly after selling a UK residential property.

If you sell or dispose of a UK residential property and Capital Gains Tax is due, you must:

• Report the disposal to HMRC within 60 days of completion

• Pay an estimate of the Capital Gains Tax within the same 60 day period

This reporting and payment is done separately from your annual Self Assessment tax return.

The key point is timing. The tax is no longer dealt with months later. HMRC now expect it very quickly after the sale completes.

When the 60 day rule applies

The 60 day rule applies when all of the following are true:

• You dispose of a UK residential property

• The disposal creates a chargeable gain

• Capital Gains Tax is due after reliefs and allowances

It applies to individuals, trustees, and personal representatives. It does not apply in the same way to limited companies, which pay Corporation Tax instead.

What counts as a disposal for the 60 day rule

A disposal is not limited to a straightforward sale.

The 60 day rule can apply where you:

• Sell a rental property

• Sell a former home that does not qualify fully for Private Residence Relief

• Gift a property to someone other than your spouse

• Transfer a property for value

• Dispose of part of a property

• Exchange contracts that are later completed

In all cases, the critical date is completion, not exchange.

When the 60 day clock starts

The 60 day period starts from the date of completion, not the date contracts are exchanged.

Completion is the date when:

• Ownership legally transfers

• The buyer pays the purchase price

• The keys are handed over

This distinction is vital. Many people incorrectly assume the clock starts at exchange, which can lead to unnecessary panic or, worse, missing the real deadline.

Properties that are excluded from the 60 day rule

The 60 day rule does not apply where no Capital Gains Tax is due.

Common examples include:

• Selling your main home that is fully covered by Private Residence Relief

• Transferring a property to your spouse or civil partner while living together

• Selling a property at a capital loss

• Selling non residential property such as commercial premises

However, you must be absolutely certain that no CGT is due. HMRC do not accept ignorance or assumptions as excuses.

Why HMRC introduced the 60 day rule

The rule was introduced to accelerate the collection of Capital Gains Tax and improve compliance.

Historically, many property disposals were:

• Reported late

• Calculated incorrectly

• Missed altogether

By requiring reporting and payment within 60 days, HMRC receive tax much sooner and reduce the risk of non compliance.

From a taxpayer’s perspective, it significantly changes cash flow planning.

What you must report within 60 days

Within the 60 day window, you must submit a UK Property Capital Gains Tax return.

This return requires you to report:

• The property address

• The completion date

• Sale proceeds

• Purchase price

• Allowable purchase and sale costs

• Capital improvement costs

• Any reliefs claimed

• Your estimated taxable income for the year

• The estimated Capital Gains Tax due

This is not a simple notification. It is a detailed calculation.

Estimating your Capital Gains Tax correctly

One of the most challenging aspects of the 60 day rule is that the tax paid is only an estimate.

At the point of sale, you may not yet know:

• Your final income for the tax year

• Whether other gains or losses will arise

• Whether pension contributions will change your tax band

Despite this, HMRC still require a reasonable estimate based on the information available at the time.

This estimate must be made in good faith and supported by calculations.

Capital Gains Tax rates applied at 60 days

When calculating the tax due, residential property gains are taxed at:

• 18 percent to the extent they fall within the basic rate band

• 28 percent to the extent they fall above it

To apply these rates correctly, you must consider:

• Your other taxable income for the year

• How much of the basic rate band is already used

• How much of the gain falls into each band

This is one of the most common areas where errors occur.

Using your annual CGT allowance in the 60 day return

You can deduct your annual CGT allowance when calculating the gain, provided you have not already used it elsewhere in the tax year.

If you are unsure whether the allowance will be used later in the year, you still need to make a reasonable estimate.

Joint owners each submit their own 60 day return and each use their own allowance.

Private Residence Relief and the 60 day rule

If the property was your main home at any point, Private Residence Relief may reduce the gain.

Relief typically covers:

• The period you lived in the property

• The final period of ownership, even if rented out

Calculating this relief accurately is essential. HMRC frequently review Private Residence Relief claims.

If the relief fully covers the gain, the 60 day rule does not apply because no CGT is due. If it only partially covers the gain, the rule applies.

Jointly owned properties and reporting

For jointly owned properties:

• Each owner reports their share of the gain separately

• Each owner submits their own 60 day return

• Each owner pays their own CGT

There is no joint return for married couples or co owners.

This often surprises people and leads to missed filings.

Paying the tax within 60 days

The estimated Capital Gains Tax must be paid within the same 60 day period.

Payment is usually made:

• Online through your HMRC account

• By bank transfer

Failure to pay on time results in interest and potentially late payment penalties.

What happens after the 60 day return is filed

Filing the 60 day return does not replace your Self Assessment return.

You must still:

• Report the property disposal on your annual tax return

• Include the final gain

• Adjust the tax paid if necessary

The 60 day payment is credited against your final tax liability.

Correcting the CGT position on your tax return

Your final Self Assessment return allows you to:

• Adjust for changes in income

• Apply additional reliefs or losses

• Correct estimates

• Reclaim overpaid CGT if necessary

If too much CGT was paid at 60 days, HMRC will refund the excess. If too little was paid, the balance becomes payable.

What if you miss the 60 day deadline

Missing the 60 day deadline triggers automatic penalties.

Typical penalties include:

• An initial late filing penalty

• Daily penalties if the delay continues

• Further penalties after longer delays

• Interest on late paid tax

These penalties apply even if the tax itself is paid later.

HMRC are strict about this deadline.

Reasonable excuse and appeals

You can appeal penalties if you have a reasonable excuse.

HMRC may accept excuses such as:

• Serious illness

• Bereavement

• Severe system failures beyond your control

They do not usually accept:

• Not knowing the rule

• Relying on a solicitor to deal with tax

• Being too busy

• Forgetting the deadline

This is why awareness of the rule is so important.

Common mistakes I see with the 60 day rule

From real world experience, the most common errors are:

• Assuming the tax is dealt with on the annual return

• Missing the deadline entirely

• Using exchange date instead of completion date

• Incorrect CGT calculations

• Forgetting allowable costs

• Not applying Private Residence Relief correctly

• Not submitting separate returns for joint owners

• Paying no tax because the estimate felt uncertain

Most of these mistakes are avoidable with early advice.

The role of solicitors and conveyancers

Solicitors handle the legal transfer of property, not your tax obligations.

While they may remind you of the 60 day rule, they are not responsible for:

• Calculating CGT

• Filing the return

• Paying the tax

Assuming your solicitor will deal with this is one of the biggest and most expensive misunderstandings I see.

Planning for the 60 day payment

The 60 day rule changes cash flow planning.

Before selling, you should consider:

• How much CGT is likely to be due

• Whether funds will be retained from the sale

• Timing of completion

• Impact on other financial commitments

Selling a property without planning for the CGT payment often leads to unnecessary stress.

What if the property sale completes near a tax year end

Completion date, not tax year end, determines the 60 day deadline.

Even if the sale completes on 5 April:

• The 60 day clock still applies

• The CGT must still be reported and paid within 60 days

You cannot wait until the tax return deadline.

Multiple property sales in one year

If you sell multiple properties in the same tax year:

• Each disposal is reported separately

• Each has its own 60 day deadline

• CGT estimates may need updating as income changes

This can become complex quickly.

How HMRC enforce the 60 day rule

HMRC receive data from:

• Land Registry

• Solicitors

• Conveyancers

If a disposal is not reported, HMRC will know.

In my experience, HMRC are increasingly proactive in issuing penalties where returns are missing.

When professional advice is strongly recommended

In my professional opinion, advice is essential where:

• The gain is significant

• The property was ever your home

• The property is jointly owned

• There have been improvements

• Income levels are close to tax band thresholds

• You are selling more than one property

• The sale is imminent

The cost of advice is usually far lower than penalties or overpaid tax.

A practical approach to handling the 60 day rule

The most effective approach is:

• Calculate the gain before the sale completes

• Gather all purchase and improvement records early

• Estimate income for the year realistically

• Submit the 60 day return promptly

• Pay the estimated tax on time

• Reconcile everything on the annual return

This turns the rule from a risk into a routine process.

Final thoughts from real world experience

The 60 day Capital Gains Tax rule is one of the most significant changes to property taxation in recent years. It has caught out thousands of property owners, not because they tried to avoid tax, but because they simply did not realise the rule existed.

Selling a property now creates an immediate tax obligation, not a future one. The days of waiting until the following January to think about Capital Gains Tax are gone.

With the right preparation, the 60 day rule is manageable. Without it, it becomes an expensive and stressful surprise.

You may also find our guidance on What is Private Residence Relief and who qualifies for it and What happens tax wise if I live in a property before selling it useful when exploring related property tax questions. For a broader overview of property tax reporting and planning topics you can visit our property hub which brings all related guidance together.