The exchange versus completion distinction is one of the most misunderstood aspects of property CGT. It is important because it affects which tax year a gain falls into, the rate of tax that applies, and — critically — whether there is any scope for pre-sale planning before the gain crystallises.
The legal rule: disposal occurs at exchange
For CGT purposes, the date of disposal is the date on which contracts are exchanged. This is established in HMRC's Capital Gains Tax Manual (CG14260) and confirmed in case law.
Completion is when the money transfers and the buyer takes possession. It can be days, weeks, or even months after exchange. But for CGT, the transaction has already legally taken place at exchange.
This means:
- A property exchanged on 3 April 2026 and completing on 6 May 2026 falls into the 2025/26 tax year, not 2026/27.
- A property exchanged on 7 April 2026 and completing on 30 May 2026 falls into the 2026/27 tax year.
One week's difference in the exchange date can put a gain into a different tax year — with potentially different Annual Exempt Amount availability, different income levels, and different applicable CGT rates.
The 60-day return: the clock starts at completion
This is where the apparent contradiction lies. The 60-day reporting window — the deadline for filing the CGT property return and paying the tax — starts from the completion date, not the exchange date.
So the gain belongs to the tax year of exchange, but the deadline to report and pay it runs from completion.
For the example above (exchange 3 April 2026, completion 6 May 2026):
- Tax year of the gain: 2025/26
- 60-day reporting deadline: 60 days from 6 May 2026 = 5 July 2026
- The 60-day return still belongs to 2025/26 even though it is filed in 2026/27
HMRC's online UK Property Reporting Service allows you to specify both the exchange date and completion date. The service uses the exchange date to determine the tax year.
Why this matters for tax planning
If you are approaching the end of a tax year and have not yet exchanged, you have a choice. Exchanging before 5 April keeps the gain in the current tax year. Exchanging after 6 April pushes it into the next.
Reasons you might prefer the current tax year:
- You have capital losses from other assets that expire at year end
- Your income this year is lower than it will be next year (lower CGT rate if portion below HRT threshold)
- You have unused Annual Exempt Amount this year but expect to have gains next year too
Reasons you might prefer the next tax year:
- Your income drops significantly in the new year (lower rate applies)
- You plan to make large pension contributions in the new year
- You want to make a spousal transfer before exchange and need more time
Once contracts are exchanged, you have no further control over which tax year the gain falls into. Any planning must happen before that point.
What about delayed completions and conditional contracts?
Where a contract is conditional — for example, subject to planning permission, a mortgage condition, or a break clause — the disposal date is the date on which the condition is satisfied, not the date the conditional contract was entered into. Long commercial deals with conditions can therefore have a different exchange date for CGT purposes than the date of signing.
For standard residential property transactions, the position is straightforward: unconditional exchange fixes the date.
Simultaneous exchange and completion
In some transactions, exchange and completion happen on the same day. This is common in auction sales and some chain-free transactions. In this case, the same date applies for both the disposal date (tax year) and the start of the 60-day clock.
The practical implication: act before exchange
The key takeaway is that all meaningful CGT planning — spousal transfers, pension contributions, crystallising investment losses — must be completed before exchange. After exchange, the gain is fixed. The only remaining question is how quickly the 60-day return is filed.
If you are close to exchange and want to understand the tax year implications or whether year-end planning is worth doing, speak to a Chartered Accountant/Chartered Tax Advisor now — not after your solicitor calls to confirm exchange.