CG73550 - Residential Property gains

TCGA92/S1H, Sch1B

The charge to tax and reporting requirements

For non-corporates that are liable to CGT, including individuals and trustees, see CG10245 for the rate of tax that applies to residential property gains. Additionally, the identification of this type of gain is relevant for the purposes of the Non-Resident Capital Gains rules see CG73700C, CG73920C.

Both UK residents and non-UK residents may be required to pay CGT and file a return through the CGT on UK Property Account see CG-APP18C. The filing of a return in connection with a disposal of UK residential property, along with payment of any CGT falling due on the disposal, should be done within:

  • 60 days of selling the property if the completion date was on or after 27 October 2021; or
  • 30 days of selling the property if the completion date was between 6 April 2020 and 26 October 2021.

For companies within the charge to Corporation Tax, there is no special rate of tax for residential property gains, which should be reported through the company’s tax return in the normal way.  However, there are special rules for non-UK companies that are only liable to Corporation Tax because of a gain on an interest in UK property. 

If a non-UK company makes a disposal an interest in UK land and is not within the charge to UK Corporation Tax for any other reason (such as receiving UK property rental income) then it will no longer be chargeable to Corporation Tax and so will have an accounting period lasting only one day.  The rules for paying Corporation Tax in instalments may mean that, strictly, payment of the tax is due on the date of the disposal. In these cases HMRC will treat the tax as being payable 3 months and 14 days after the end of the one day accounting period.


What is a Residential Property Gain?

A summary of the rules follows:

A person disposes of residential property where:

  1. the land consisted or included a dwelling
  2. the interest in land subsisted for the benefit of land that consisted or included a dwelling
  3. the interest in land subsists under a contract for the acquisition of land where a building is to be constructed or adapted for use as a dwelling.

Consideration is given to the period to the date of disposal.

If the interest in land disposed of results from interests acquired at different times the period considered starts from the time of the first acquisition.

A building is a dwelling at any time when:

  1. it is used or suitable for use as a dwelling
  2. it is in the process of being constructed or adapted for use as a dwelling
  3. it is not an institutional building (see sch1B para 5(3)).

Land that at any time is or is intended to be occupied or enjoyed with a dwelling as garden or grounds is taken to be part of that dwelling. This may include land that is garden or grounds outside of the permitted area for private residence relief purposes (see CG64350P and CG64800P)

Special provisions apply where buildings are temporarily unsuitable for use as a dwelling (para 6) and where a building has undergone works (para 7). Also rules on apportionment of a gain are within para 2.

The full detail of the rules can be found in Schedule 1B TCGA. In most cases identification of what the residential property gain is will be straightforward. E.g. a residential property that was a buy to let investment would give rise to a residential property gain.

In more complicated cases you may need to refer directly to the statute but will need a clear understanding of precisely what the asset was and what if any changes there may have been during its ownership by the person making the disposal.

In all cases and in particular those that involve construction or development consideration should be given to considering whether a charge to Income Tax would take priority over a Capital Gains Tax charge.

A residential property gain that might have been deferred e.g. with an EIS deferral relief claim, remains a residential property gain if it is brought back into charge on a later disposal.