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

Selling a property in the UK can trigger Capital Gains Tax (CGT) if it is not your main residence. Since 2020, HMRC has introduced stricter reporting deadlines, requiring most property owners to declare and pay CGT within 60 days of completion. This article explains how the 60-day rule works, who it applies to, what information you need to report, and how to avoid late filing penalties.

When you sell a property that is not your main home, you may need to pay Capital Gains Tax on the profit. The 60-day rule means that individuals and trustees must report and pay any CGT due within 60 days of the completion date, rather than waiting until their annual Self Assessment tax return. This change was introduced to ensure faster collection of property-related tax and applies to most residential property disposals.

When the 60-day rule applies

The 60-day reporting rule applies to disposals of UK residential property where Capital Gains Tax is due. It covers:

  • Second homes

  • Buy-to-let properties

  • Inherited properties sold at a gain

  • Homes that were once your main residence but are no longer fully exempt

The rule does not usually apply if the property qualifies for full Private Residence Relief (PRR), which exempts your main home from CGT. For example, if you sell the house you have lived in continuously as your main residence, you will not need to report or pay under this rule.

It also does not apply to companies, as they report property gains through Corporation Tax rather than CGT.

When the clock starts ticking

The 60-day period begins on the date of completion, not the date you exchange contracts. For example, if you exchanged contracts on 1 March but completed the sale on 30 April, the 60-day countdown starts from 30 April.

This means that by 29 June, you must have both submitted your CGT return to HMRC and paid any tax due.

How to calculate your Capital Gains Tax

To report within the 60-day window, you need to estimate your taxable gain and the CGT due. The gain is calculated as:

Sale price minus (purchase price + allowable costs + any reliefs).

Allowable costs include:

  • Stamp Duty Land Tax from the purchase

  • Legal and estate agent fees

  • Capital improvements such as extensions or conversions (but not repairs)

Once the gain is calculated, you apply any available exemptions or reliefs. Most individuals have an annual CGT exemption (£3,000 for 2024–25). You can then work out the tax rate that applies to the remaining gain.

CGT rates for residential property are currently 18% for basic rate taxpayers and 24% for higher and additional rate taxpayers. The rate you pay depends on your total taxable income and the size of the gain.

Example of how the rule works

Suppose you sell a second home for £400,000 that you bought for £250,000 ten years ago. You incur £10,000 in legal and estate agent fees and spent £20,000 improving the property.

Your gain is:
£400,000 − (£250,000 + £10,000 + £20,000) = £120,000.

After deducting the £3,000 CGT allowance, your taxable gain is £117,000. If you are a higher-rate taxpayer, you will pay CGT at 24%, giving a tax bill of £28,080.

You must report the sale and pay this amount to HMRC within 60 days of completion.

How to report to HMRC

You must report the disposal using HMRC’s Capital Gains Tax on UK property online service. This requires a Government Gateway account. If you already complete a Self Assessment, you will still need to submit this separate report within 60 days.

Once the return is submitted, HMRC will issue a reference number for payment. You can pay online by bank transfer, debit card, or direct from your bank account.

If you later realise your figures were incorrect, you can amend the return or reconcile the exact amount when filing your Self Assessment for the same tax year.

Penalties for late filing or payment

Failing to meet the 60-day deadline can result in penalties and interest. HMRC currently applies:

  • A £100 fixed penalty immediately after the deadline

  • Further penalties after three and six months if still unpaid

  • Daily interest on the outstanding tax amount

Even if you have not received the full sale proceeds or are waiting for final figures, you must still make a reasonable estimate and submit your return on time to avoid fines.

Non-UK residents and property sales

Non-UK residents are also required to report the disposal of any UK land or property within 60 days, even if there is no tax to pay. This includes both residential and commercial properties. The same HMRC online service must be used, and the rule applies regardless of whether the property qualifies for exemptions or reliefs.

Interaction with Self Assessment

If you normally file a Self Assessment tax return, you still need to complete the 60-day property report separately. When you later submit your annual return, you can update or confirm the figures, ensuring the total tax paid matches your final calculation.

This process prevents delays in tax collection and avoids potential duplication of income or gains across returns.

Using estimated figures

In some cases, you may not know the exact figures within the 60-day period, for example if you are waiting for final cost confirmations or professional valuations. HMRC allows you to use estimated figures as long as they are reasonable and based on available information.

You should keep full records of how you arrived at the estimate and amend the return later if necessary. This flexibility ensures you remain compliant without delaying submission.

Common mistakes to avoid

Many property owners misunderstand or overlook the 60-day rule. The most frequent errors include:

  • Assuming you can wait until Self Assessment to report the gain

  • Forgetting to include allowable expenses that reduce taxable gain

  • Misjudging the 60-day deadline by counting from exchange instead of completion

  • Missing the payment deadline despite submitting the report

  • Not reporting because no gain was made, when HMRC still requires a submission for non-residents

Avoiding these errors can save unnecessary fines and ensure your tax records remain accurate.

Practical steps to prepare for a sale

To stay organised when selling a property that may trigger CGT:

  1. Gather your original purchase documents, including contracts and legal statements.

  2. Keep detailed records of improvements and associated costs.

  3. Estimate potential tax before completion to plan for the payment.

  4. Create your Government Gateway account in advance if you don’t already have one.

  5. Submit your CGT report and make payment as soon as possible after completion.

By preparing early, you reduce the risk of errors and avoid last-minute stress.

Professional support

If your property history is complex or involves partial reliefs, such as periods of private residence or letting, professional advice can help ensure you calculate the correct gain. Accountants can also handle the 60-day filing process and ensure HMRC receives both accurate figures and timely payment.

This is particularly helpful for landlords with multiple properties or those selling inherited or mixed-use assets, where reliefs like Letting Relief or Principal Private Residence Relief may apply in part.

Conclusion

The 60-day Capital Gains Tax rule requires property sellers to report and pay tax within 60 days of completion if CGT is due. This applies mainly to second homes, rental properties, and other residential sales that do not qualify for full private residence relief.

By calculating your gain promptly, preparing accurate records, and submitting the online return in time, you can avoid penalties and manage your tax efficiently. Whether you handle it yourself or use an accountant, understanding the 60-day rule ensures your property sale remains fully compliant with HMRC requirements.