60-Day CGT Deadline: What Happens If You Miss It?

CGT Deadline rules can easily catch property owners by surprise. Selling a property can involve estate agents, solicitors, mortgage repayments and moving arrangements, so tax reporting may not be the first thing on your mind. However, where Capital Gains Tax is due on the disposal of UK residential property, you may have only 60 days from completion to report the disposal and pay the estimated tax.

CGT Deadline rules can catch property owners by surprise, particularly when selling a rental property, second home or another residential property that has increased in value. Where Capital Gains Tax is due on the disposal of UK residential property, you may need to report the gain to HMRC and pay the estimated tax within 60 days of completion. This CGT Deadline is separate from the normal Self Assessment timetable, so waiting until your annual tax return could result in late reporting.

Missing the CGT Deadline can lead to penalties and interest, and the potential cost can increase the longer the position remains unresolved. Whether you have recently completed a property sale or have only just realised that the CGT Deadline has already passed, understanding the reporting rules and taking prompt action can help you minimise additional charges and put your tax affairs back in order.

Understanding the CGT Deadline is therefore important for landlords, second-home owners and other property sellers. In this guide, we explain when the 60-day rule applies, what happens when the CGT Deadline is missed, the penalties HMRC can charge and the steps you should take to correct the position.

What is the 60-day Capital Gains Tax rule?

When an individual sells or otherwise disposes of UK residential property and Capital Gains Tax is payable, the disposal will generally need to be reported to HMRC within 60 days of completion. Any estimated Capital Gains Tax due must normally also be paid within the same period.

For disposals of UK residential property completed on or after 27 October 2021, HMRC confirms that the reporting and payment period is 60 days. The previous deadline was 30 days for relevant disposals completed between 6 April 2020 and 26 October 2021.

The CGT Deadline is based on the completion date rather than the date contracts were exchanged. This distinction matters because the disposal date used for some Capital Gains Tax purposes may differ from the date used to determine the 60-day reporting period.

For example, suppose you exchange contracts to sell a rental property on 1 June but completion takes place on 30 June. The 60-day CGT Deadline is calculated by reference to the completion date.

The CGT Deadline does not mean every homeowner selling their property automatically needs to pay Capital Gains Tax. If the property has been your only or main residence throughout the relevant ownership period, Private Residence Relief may eliminate the taxable gain. Other reliefs, allowable costs and the annual exempt amount can also affect whether tax is payable.

However, you should establish the tax position promptly rather than simply assuming that no CGT Deadline applies.

Who needs to consider the CGT Deadline?

The CGT Deadline is particularly relevant to individuals disposing of residential property that has increased in value and does not qualify for full Private Residence Relief.

Common examples include buy-to-let landlords selling rental properties, individuals selling second homes and people selling properties that were previously their main residence but were subsequently rented out.

The CGT Deadline may also become relevant where only part of the gain qualifies for Private Residence Relief. For example, somebody may have lived in a property for several years before moving elsewhere and letting the original property.

Non-UK residents have additional reporting obligations. HMRC states that non-residents generally need to report disposals of UK property or land even where there is no Capital Gains Tax to pay.

Because circumstances differ, determining whether the CGT Deadline applies should ideally be done shortly after the sale has completed—or even before completion where a taxable gain is expected.

How is the Capital Gain calculated?

Before meeting the CGT Deadline, you need to calculate the estimated taxable gain.

Broadly, you start with the disposal proceeds and deduct the original acquisition cost. Certain incidental costs of buying and selling may also be deductible, such as qualifying legal fees, estate agent fees and Stamp Duty Land Tax originally paid on acquisition.

Qualifying capital improvement expenditure can potentially reduce the gain as well. However, normal repairs and maintenance are not automatically treated as capital improvement costs for Capital Gains Tax purposes.

You then consider any available reliefs and the annual exempt amount. The resulting taxable gain is used alongside your estimated taxable income to determine the Capital Gains Tax payable.

This is one reason the CGT Deadline can require careful planning. The final tax position for the year may not yet be known when the property return is due, so reasonable estimates may sometimes be required.

What Happens If You Miss the CGT Deadline?

Missing the CGT Deadline should not be ignored. If the return was required and has not been submitted, the best approach will usually be to correct the position as soon as possible.

HMRC’s late-filing regime provides for an initial £100 fixed penalty when a relevant return is not delivered by its filing date. Further penalties can potentially arise where the filing remains outstanding for longer periods.

The important point is that missing the CGT Deadline by a short period does not mean you should wait for HMRC to contact you. Further delay can make the situation more expensive.

Once you realise the CGT Deadline has passed, gather the purchase and sale information, calculate the gain, submit the required property return and arrange payment of any outstanding Capital Gains Tax.

Initial penalty after the CGT Deadline

The first consequence of missing the CGT Deadline can be a £100 late-filing penalty.

HMRC’s Compliance Handbook confirms that an initial fixed penalty of £100 applies where a person fails to deliver a relevant return or document by the filing date. The penalty date is the day after the filing date.

This makes acting quickly important. A property owner should not assume that being only slightly beyond the CGT Deadline means the reporting obligation disappears.

If you discover the problem shortly after the CGT Deadline, submitting immediately can prevent the return remaining outstanding for the longer periods at which additional penalties can arise.

More serious penalties for longer delays

The consequences can become more significant when the return remains outstanding for months after the CGT Deadline.

HMRC’s penalty framework provides for further penalties where relevant returns remain outstanding after specified periods. HMRC guidance states that further penalties can arise after three, six and twelve months.

At six months, the further penalty can be the greater of £300 or 5% of the tax liability that would have been shown on the return.

If the failure continues for 12 months, another penalty may arise. For a non-deliberate failure, HMRC’s manual states that the penalty is generally the greater of £300 or 5% of the relevant tax liability. More serious percentages can apply where information has deliberately been withheld, particularly where concealment is involved.

The longer you leave a missed CGT Deadline unresolved, therefore, the greater the potential financial consequences.

Can HMRC charge interest as well?

Yes. The filing obligation and payment obligation need to be considered separately.

The 60-day system generally requires both the property disposal to be reported and the estimated Capital Gains Tax to be paid within the required period. HMRC specifically warns taxpayers not to wait until the following tax year to report relevant UK residential property gains because interest and penalties may arise.

Interest is particularly important because it relates to late payment rather than simply late submission. Even if you eventually submit the required return, interest can continue to increase while the tax remains unpaid.

Therefore, resolving a missed CGT Deadline means checking both sides of the position: has the required return been submitted, and has the Capital Gains Tax been paid?

Simply filing the return without dealing with the outstanding tax may not completely resolve the issue.

Example of a missed CGT Deadline

Suppose Sarah purchased a buy-to-let property for £180,000 several years ago and later sells it for £260,000.

After considering eligible buying and selling costs, qualifying capital expenditure, available reliefs and her annual exempt amount, Sarah determines that she has a taxable gain and Capital Gains Tax to pay.

Completion takes place on 15 May.

Sarah mistakenly believes she can simply include the property sale on her Self Assessment return and pay the tax by the normal Self Assessment deadline. She therefore takes no action within the required 60-day period.

Several months later, Sarah speaks to her accountant and discovers that the CGT Deadline has already passed.

Rather than waiting until her Self Assessment return is prepared, Sarah should address the outstanding property reporting requirement promptly. Depending on the length of the delay and circumstances, HMRC may impose late-filing penalties and interest may be payable on the overdue tax.

The example demonstrates why the CGT Deadline should be considered as soon as a property disposal completes.

Can you appeal a penalty for missing the deadline?

In some circumstances, yes.

A taxpayer may be able to appeal a late-filing penalty where there was a reasonable excuse for failing to meet the CGT Deadline. HMRC’s guidance confirms that a reasonable excuse can provide grounds for challenging a late-filing penalty.

However, simply forgetting about the CGT Deadline or not realising that the rules existed will not necessarily be enough.

Whether an excuse is reasonable depends on the individual facts. The taxpayer should normally explain what prevented compliance, provide supporting evidence where available and demonstrate that they corrected the position without unreasonable delay once the problem preventing compliance ended.

The key point is that an appeal against a penalty does not remove the underlying reporting obligation. You should normally submit the outstanding return and deal with the tax rather than leaving the CGT Deadline issue unresolved while considering an appeal.

What should you do if the CGT Deadline has already passed?

If you have already missed the CGT Deadline, acting quickly is generally better than waiting for HMRC to identify the problem.

First, confirm whether a 60-day property return was actually required. Review the property, ownership history, sale proceeds, purchase price, allowable costs, improvements and any available reliefs.

Next, calculate the estimated Capital Gains Tax liability. You may need your completion statement, original purchase completion statement, invoices for qualifying improvements and details of your expected taxable income for the relevant tax year.

You should then submit the required report to HMRC and pay the outstanding tax as soon as possible. If penalties have already been issued and you believe there was a reasonable excuse for missing the CGT Deadline, consider whether an appeal is appropriate.

Keep supporting documentation. Property transactions can involve substantial figures, and records supporting acquisition costs, improvement expenditure and relief claims can be important if HMRC later asks how the gain was calculated.

Do you still report the gain on Self Assessment?

Meeting the CGT Deadline does not necessarily mean that you can forget about the transaction when preparing your annual tax affairs.

Depending on your circumstances, the disposal may also need to be reflected through Self Assessment. The amount initially paid under the 60-day process is effectively based on the information available at that point, while the final tax position can depend on your overall income and gains for the tax year.

This is another reason accurate record keeping is important. Keep copies of the property return, calculation and payment details so that the figures can be reconciled when the annual tax return is prepared.

Likewise, filing a Self Assessment return does not retrospectively replace an earlier CGT Deadline that should have been met.

How to avoid missing the CGT Deadline

The simplest approach is to consider Capital Gains Tax before the property sale completes.

If you expect to sell a rental property, second home or another property that may generate a taxable gain, start gathering the purchase and improvement records early. Do not wait until completion before trying to locate documents from many years ago.

Record the completion date immediately and calculate the CGT Deadline from that date. You should also establish whether professional valuations, historic records or additional calculations will be required.

Most importantly, do not assume that your conveyancing solicitor automatically deals with the Capital Gains Tax reporting. Confirm who is responsible for the return and payment.

A little preparation can make meeting the CGT Deadline considerably easier and reduce the risk of unnecessary penalties.

Final thoughts

CGT Deadline requirements mean that property sellers may have much less time to deal with their tax affairs than they expect. For relevant UK residential property disposals completed on or after 27 October 2021, the reporting and payment period is generally 60 days from completion.

Missing the CGT Deadline can lead to an initial late-filing penalty, with further penalties potentially arising where the return remains outstanding for several months. If Capital Gains Tax is unpaid, interest can also increase the overall cost. The longer the CGT Deadline problem remains unresolved, the more important it becomes to take action.

If you have recently sold a rental property, second home or other residential property, check whether the CGT Deadline applies rather than waiting until Self Assessment. If you have already missed the CGT Deadline, calculate the position, report the disposal and pay any outstanding tax as soon as possible.

Professional advice can be particularly valuable where Private Residence Relief, periods of letting, jointly owned property, historic improvement costs or uncertain valuations are involved. Getting the calculation right while dealing with the CGT Deadline promptly can help minimise penalties, interest and unnecessary correspondence with HMRC.

Missing the CGT Deadline can result in penalties and interest, making an already complicated property sale more expensive. The 60-day reporting period can pass quickly, particularly when you are dealing with solicitors, estate agents and other matters following completion. Understanding your Capital Gains Tax obligations early can help you avoid unnecessary problems with HMRC.

If you have already missed the CGT Deadline, it is important not to delay matters further. Check whether a property return was required, calculate the Capital Gains Tax due and submit the relevant information to HMRC as soon as possible. Where a penalty has been issued, you may also be able to appeal if you have a genuine reasonable excuse supported by the circumstances.

The best way to avoid CGT Deadline issues is to plan before completing the property sale. Keep records of your purchase costs, legal fees, improvement expenditure and selling costs, and consider the potential tax liability in advance. Professional advice can also help ensure the gain is calculated correctly, available reliefs are considered and the reporting requirements are met on time.

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