Selling a London buy-to-let: two dates decide the tax

A landlord selling a London flat has two dates that matter for tax, and they do different jobs. The day contracts are exchanged decides which tax year the gain belongs to. Where there is tax to pay, the day the sale completes starts a 60-day clock to report the gain to HMRC and pay it. Mix them up and you can file in the wrong year, or miss the deadline altogether.

Exchange fixes the tax year

For Capital Gains Tax, a sale made under a contract is treated as happening when the contract is made, not when it is carried out. HMRC's Capital Gains Manual puts it this way: under section 28 of the Taxation of Chargeable Gains Act 1992, "the time of disposal and acquisition is the time the contract is made, or, if the contract is conditional, the time when the conditions are satisfied".

For a property sale in England, the contract is made at exchange. So exchange decides the tax year, and with it the annual exempt amount, your income for the year and the rates that apply.

Completion starts the 60 days

The deadline runs from the other date. gov.uk says you "must report and pay any Capital Gains Tax due on UK residential property within 60 days of completing the sale". You do it through a separate Capital Gains Tax on UK property account, not your tax return, although the sale goes on your return as well if you file one.

HMRC's own form asks for both dates, the date you exchanged and the date you stopped owning the property. That is a fair hint that it expects them to differ.

When the gap matters

Often the two dates are close together and fall in the same tax year. The gap matters in two situations.

The first is a long gap across 5 April. Exchange in March and complete in May, and the gain belongs to the earlier tax year, even though the money and the 60-day deadline come in the later one.

The second is the one that costs money: assuming the sale can wait for January's tax return. It cannot. A landlord with tax to pay who completes on 1 December and does nothing until 31 January is already past the 60 days, and gov.uk warns of interest and a penalty for reporting and paying late.

Illustration, not a real client: a landlord exchanges on the sale of a one-bedroom flat in Lewisham on Friday 12 March 2027 and completes on Thursday 15 April. The gain falls in the 2026/27 tax year, because that is when contracts were exchanged. The report and payment are due within 60 days of 15 April, so by Monday 14 June 2027. The gain then also goes on the landlord's 2026/27 tax return, with the tax already paid set against the bill.

What to do before you exchange

Gather the purchase price, the costs of buying and selling, and the cost of any improvements, such as an extension or a new kitchen, because they reduce the gain. Repairs and redecoration do not count. They are a cost against rent, not against the gain.

Then set the two dates side by side. Our guide to the 60-day Capital Gains Tax report on a buy-to-let walks through the HMRC account step by step, and our Capital Gains Tax calculator gives a first estimate of the bill. If the Budget changes anything for property sellers, check gov.uk before you exchange.

Exchange tells you which year. Completion tells you how long you have. Write both dates on the same page, the day your solicitor gives them to you.

About the author

Harvey Dhillon is Founder and CEO of Zmartly, a UK accountancy firm for small businesses. He grew up in West London and began his career in investment banking finance at Barclays, before going full-time on Zmartly in 2020. He is a Chartered Management Accountant (ACMA, CGMA).

Featured photo by Loris Boulinguez on Unsplash.