How to reclaim overpaid CGT

Back in May 2021, we reported how some people were facing problems when trying to reclaim overpaid CGT on property sales.

The problem stems from a change to CGT reporting rules that came into force in April 2020. Before then, you had up to 22 months to calculate, report and pay CGT. Since then, you’ve had to complete a CGT return and pay tax on property sales first within 30 days and then from 27 October 2021 within 60 days.

This system has resulted in a good number of people overpaying CGT. This has happened because they weren’t aware of their income level for the relevant tax year. For example, if you sold a property in the 2024/25 tax year, but hadn’t yet calculated your income for 2023/24, you might have paid CGT at the higher rate of 24% to be on the safe side.

If it then turned out your income was lower than you thought, you would have overpaid CGT.

How do I reclaim overpaid CGT?

The main problem that you face is that, once you’ve essentially paid CGT on account, HMRC’s systems will only automatically offset any excess against other CGT liabilities. You can’t automatically offset overpaid CGT against your income tax or Class 4 NIC liabilities.

In other words, the system makes it very easy to overpay CGT on property and very difficult to claim it back.

So how do you reclaim overpaid CGT? For the time being, HMRC has suggested two workarounds. These are:

1. Before you submit your Self-Assessment Tax Return, amend the 60 day CGT Return and recover the overpaid CGT that way
2. Submit your Self-Assessment Tax Return, then phone up HMRC on 0300 200 3300. You will need to ask them to offset the excess CGT against your SA tax bill.

Unfortunately, this isn’t the end of the story. You can’t amend the 60-day CGT return in the following instances:

1. You’ve already submitted your Self-Assessment Tax Return
2. You’ve missed the filing date for your SA Return
3. You need to make an amendment because of something that has happened since you disposed of the property (e.g. you may subsequently have made capital losses from the sale of shares after selling the house)

In these cases, the amendment needs to be made on your Self-Assessment Tax Return, not the CGT Return.

Do you need help reclaiming CGT?

If you are a THP client, we can help you cut through this maze of red tape. By far the best plan is for you to get in touch before you sell any property. That way, we can plan ahead and help minimise the risk of overpayment and avoid penalties. However, if you’ve already sold your property and you need help getting HMRC to refund overpaid CGT, talk to your account manager. We’d be happy to help sort out the problem – but let’s hope HMRC makes its systems a bit more user-friendly in future years!

By the way, if you’d like further insight into CGT, be sure to check out our Capital Gains Tax Guide.