The 60-day CGT reporting rules
When property is sold during the administration of an estate, executors may need to consider Capital Gains Tax (CGT).
In addition to calculating whether a gain arises, there may also be a reporting obligation to HMRC within 60 days of completion.
Many executors are unfamiliar with this rule. Missing the reporting deadline can result in penalties, so it is important to understand when the requirement applies.
Why the 60-day reporting rule exists
The UK introduced the 60-day property reporting rule to ensure that Capital Gains Tax on residential property disposals is reported and paid more quickly.
Where a taxable gain arises on the disposal of UK residential property, the gain may need to be reported to HMRC within 60 days of the completion date.
This rule applies not only to individuals but can also apply where executors dispose of property during the administration of an estate.
When executors may need to report a gain
Executors must consider the reporting requirement when a property is sold for more than its probate value.
Assets in an estate are generally valued at their market value at the date of death. This value forms the starting point for any Capital Gains Tax calculation.
If the property is sold for more than this value, a capital gain may arise.
For example:
probate value of property: £400,000
sale price: £430,000
In this situation the estate may have realised a gain of £30,000.
If the gain is taxable, the executors may need to report the disposal within 60 days.
Situations where the 60-day rule may not apply
Not every property sale from an estate will require a 60-day report.
For example, reporting may not be required where:
the property is sold for approximately the probate value
the estate’s CGT allowance fully covers the gain
there is no Capital Gains Tax payable
Each case needs to be considered carefully, as the reporting rules depend on whether a taxable gain arises.
Calculating the capital gain
When calculating the gain, executors usually start with the probate valuation of the property.
From this value they compare the eventual sale price and may also deduct certain allowable costs, such as:
legal fees related to the sale
estate agent fees
certain improvement costs
The resulting figure determines whether a taxable gain exists and whether reporting obligations apply.
Estates and the CGT annual allowance
Estates are entitled to a Capital Gains Tax annual allowance, but this is only available for a limited period during the administration of the estate.
If the property is sold during this period, the allowance may reduce or eliminate the taxable gain.
However, if the administration period continues beyond this timeframe, the allowance may no longer apply, potentially increasing the tax liability.
Executors should therefore consider the timing of property sales carefully.
Reporting the gain to HMRC
Where a taxable gain arises, executors may need to submit a UK property CGT return to HMRC within 60 days of completion.
This return reports details of:
the property sale
the probate valuation
the calculated capital gain
the estimated tax due
Any tax due is usually payable at the same time as the report is submitted.
Failing to report the gain on time can lead to penalties and interest.
Why the rule is often overlooked
Many executors are unaware of the 60-day reporting rule because they are dealing with estate administration for the first time.
Common reasons the rule is missed include:
assuming tax is only dealt with at the end of the tax year
uncertainty about whether a gain has arisen
delays in obtaining probate valuations
Understanding the rule early in the process can help executors avoid unnecessary penalties.
Wider tax responsibilities for executors
Property sales are only one part of the tax responsibilities executors may face.
Executors may also need to deal with:
the deceased person’s final tax position
income received by the estate during administration
Capital Gains Tax on other assets sold
When professional advice may help
Property transactions can involve significant sums, and even relatively small changes in value may affect the tax position.
Professional advice may be helpful where:
the property has increased significantly in value
the administration period has been lengthy
the estate includes multiple properties
executors are unsure whether a report is required
Understanding the tax position before completion can help ensure that reporting obligations are met.
How we can help
We regularly assist executors with the tax issues that arise during estate administration.
This may include:
reviewing whether Capital Gains Tax arises on property disposals
calculating the gain and any tax payable
preparing UK property CGT returns
dealing with HMRC correspondence
If you are acting as an executor and would like guidance on the tax implications of selling property from an estate, we would be happy to discuss your situation.
