CGT problems on disposals of residential property

How Capital Gains Tax works on property disposals

Capital Gains Tax (CGT) in respect of gains on residential property must be reported and paid to HMRC using the Property Disposals Return Service. The deadline for this is currently 60 days from the date of completion. The gain must also then be reported on your self-assessment tax return.

In some circumstances, the taxpayer may overpay the amount of CGT due, with this only becoming apparent when they come to file their self-assessment for the year of disposal. For instance, a taxpayer may make a gain on residential property during the 2022/23 tax year and pay the CGT due. The taxpayer’s self-assessment for 2022/23 may include a capital loss on, say, a share disposal, which could be offset against the gain on the residential property, reducing the amount of CGT due. The taxpayer may then be due a refund from HMRC. It would be reasonable to assume that the overpayment would be refunded via the self-assessment process, but this is not the case.

HMRC’s systems are unable to match amounts paid via the Property Disposals Return Service against a taxpayer’s self-assessment account. Instead HMRC advise that if a taxpayer is in an overpayment situation a call should be made to them to request a manual adjustment to the self-assessment account. This would mean that any overpayment of CGT could be offset against the individual’s wider self-assessment tax bill or refunded if necessary.

Rachel Roberts is a Senior Tax Accountant and would be happy to chat through any queries or concerns you have on 01242 776000 or