Capital gains tax on property has become significantly more complex and more expensive in recent years. The annual exempt amount has been cut to £3,000, rates were increased in October 2024, and the 60-day reporting window catches many sellers unprepared. This guide explains your CGT position on property disposals in 2026/27.
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CGT on UK residential property is 18% (basic rate) or 24% (higher rate) for 2026/27, with a £3,000 annual exemption per individual. The disposal must be reported and tax paid within 60 days of completion via the UK Property CGT online service — not via Self Assessment. Late filing triggers immediate £100 penalty plus interest.
👉 Part of our pillar series: This article goes deep on one specific tax. For the full picture of how UK taxes fit together for individuals and small business owners, see our pillar guide: How Much Tax Do I Pay in the UK? 2026/27.
CGT Rates on Property 2026/27
| Taxpayer | CGT Rate on Property | Annual Exempt Amount |
|---|---|---|
| Basic rate taxpayer | 18% | £3,000 |
| Higher rate taxpayer | 24% | £3,000 |
| Additional rate taxpayer | 24% | £3,000 |
| Trustees | 24% | £1,500 |
💡 Which Rate Applies to You?
Your CGT rate depends on your total taxable income plus the gain. If your income plus the gain stays within the basic rate band (up to £50,270), the 18% rate applies to the portion within the band. Any gain above the basic rate band is taxed at 24%. This means higher-rate taxpayers sometimes pay a blended rate depending on where their income sits.
The 60-Day Reporting Rule
For UK residential property disposals, you must report the gain and pay any CGT within 60 days of the completion date — even if you also file a Self Assessment tax return.
⚠️ 60-Day Deadline — Commonly Missed
- The 60 days runs from completion, not exchange of contracts
- The report is made through HMRC’s online CGT on UK property service
- You must estimate and pay the CGT within 60 days even if your Self Assessment return is due months later
- Penalties apply for late reporting: £100 immediately; additional penalties at 6 and 12 months
- The payment made at 60 days is then reconciled through Self Assessment — if you overpaid, HMRC refunds the difference
📋 When the 60-Day Rule Does NOT Apply
- Where no tax is due — gain covered by annual exempt amount, Private Residence Relief, or a loss
- Disposals by companies (which report through their corporation tax return)
- Commercial property disposals (reported through Self Assessment in the normal way)
Private Residence Relief (PRR)
PRR exempts gains on the disposal of your main residence from CGT. The relief covers the period you lived in the property as your main home, plus the final 9 months of ownership in all cases.
📋 PRR — When It’s Not Full Relief
- Letting periods: periods of rental reduce PRR proportionally — but letting relief of up to £40,000 may apply (only where the owner was in shared occupation)
- Business use: rooms used exclusively for business reduce PRR on that proportion
- Large gardens: grounds over 0.5 hectares (1.25 acres) are not automatically exempt — you must show they are required for reasonable enjoyment
- Development value: if you sell with planning permission, the additional value above residential value may not qualify for PRR
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CGT on Buy-to-Let Property Sales
When you sell a buy-to-let property, CGT is calculated as:
- Proceeds (minus selling costs — estate agent fees, legal costs)
- Less: original cost (plus purchase costs — legal fees, SDLT)
- Less: improvement costs (capital improvements — extensions, new kitchens — not repairs)
- Less: annual exempt amount (£3,000)
- = Chargeable gain taxed at 18% or 24%
📋 CGT Example — Buy-to-Let Sale
- Sale proceeds (net of costs): £380,000
- Less: original cost (2015, net of costs): £200,000
- Less: improvement costs (new extension): £30,000
- Gross gain: £150,000
- Less: annual exempt amount: £3,000
- Chargeable gain: £147,000
- CGT at 24% (higher rate): £35,280
CGT Planning Strategies
🔧 Strategy 1 — Spousal Transfers Before Sale
Transfers between spouses/civil partners are at no gain/no loss — no CGT arises. Transferring part of a property to a lower-taxing spouse before sale means their share of the gain is taxed at 18% rather than 24%, and they have their own £3,000 annual exempt amount. This can save up to £12,000 on a large gain.
🔧 Strategy 2 — Time the Sale Across Tax Years
If completing near the end of a tax year, consider whether delaying completion to after 5 April makes sense. A fresh annual exempt amount (£3,000) becomes available in the new tax year, and if your income is lower in the new year, more of the gain may fall in the basic rate band at 18%.
🔧 Strategy 3 — Use Capital Losses
Capital losses from other asset disposals (shares, other property) in the same or prior tax year can be offset against property gains. Make sure any available losses are reported and claimed — they do not expire and can be carried forward indefinitely.
Worked Examples: Real Property Disposal Scenarios
The mechanics of CGT on UK property are best understood through concrete numbers. The three scenarios below use 2026/27 rates and the £3,000 annual exempt amount in force from April 2024.
Example 1: Selling a single buy-to-let, higher-rate taxpayer
Sarah bought a flat in 2010 for £150,000. She sells in June 2026 for £320,000. Allowable costs (stamp duty on purchase, conveyancing, agents’ fees on sale, a kitchen replacement that was a capital improvement) total £18,000. Her gain is £320,000 − £150,000 − £18,000 = £152,000. After deducting the £3,000 annual exempt amount, the taxable gain is £149,000. At the higher 24% residential property rate, the CGT bill is £35,760.
Sarah must file a UK Property Disposal return within 60 days of completion (by mid-August 2026) and pay an estimated £35,760 at the same time. She then includes the disposal on her 2026/27 Self Assessment by 31 January 2028, with any over- or underpayment reconciled then. Missing the 60-day deadline triggers an automatic £100 penalty even if the tax is later paid in full.
Example 2: Mixed PRR-and-letting period
James bought a house in March 2018 for £280,000 and lived in it as his only home until March 2022 (4 years). He then moved out, kept it as a rental, and sells in March 2026 for £400,000. Total ownership: 8 years. Period of occupation: 4 years. Plus final 9 months automatic exemption: total exempt period 4 years 9 months out of 8 years = 59.4%.
Gross gain: £400,000 − £280,000 − £10,000 (acquisition and disposal costs) = £110,000. PRR exempts 59.4% × £110,000 = £65,340. Chargeable gain: £44,660. After the £3,000 annual exempt amount: £41,660 taxable. At 24%, CGT is £9,998. Lettings Relief was largely abolished from April 2020 except where the owner is in shared occupation with the tenant — which doesn’t apply here, so no further relief.
Example 3: Married couple jointly selling
David and Priya jointly own a buy-to-let they bought in 2015 for £220,000 (held 50/50). They sell in 2026 for £380,000 with £12,000 of allowable costs. Total gain: £148,000, split 50/50 = £74,000 each. Each deducts a £3,000 annual exempt amount, leaving £71,000 each taxable. David is a higher-rate taxpayer (CGT at 24% = £17,040). Priya works part-time with basic-rate income — her CGT is partly at 18% (the slice that fits within her unused basic rate band) and partly at 24%. Joint ownership has effectively doubled the annual exempt amount used and given access to Priya’s lower CGT rate on some of the gain.
This is why beneficial-ownership planning matters. If they had elected via Form 17 to allocate the property 75/25 to Priya (the basic-rate spouse), more of the gain would have fallen into her lower-rate band. The election must be in place before the sale completes — retrospective adjustments are not permitted.
⚠️ The 60-day deadline runs from completion, not exchange
Exchange of contracts triggers the CGT event for valuation, but the 60-day clock starts on the day of completion. Sellers occasionally miss this distinction and assume they have 60 days from exchange — they don’t. If completion is delayed and your conveyancer doesn’t update you, the deadline can creep up. Set a calendar reminder on completion day itself.
Common CGT Mistakes That Cost Sellers Money
Most CGT errors fall into a few familiar categories. Watching for these can easily save thousands of pounds.
1. Missing allowable costs
Capital improvements (extensions, loft conversions, new kitchens replacing originals, structural work) reduce the gain on disposal. Sellers routinely forget improvements they made years ago and pay tax on a higher gain than necessary. Dig through old invoices and statements before submitting the return. Costs that are NOT allowable include mortgage interest, repairs and maintenance, and improvements that were already claimed as rental expenses.
2. Forgetting acquisition costs
The base cost includes the original purchase price PLUS stamp duty paid on acquisition, conveyancing fees, surveyor’s fees, and any other acquisition costs. Sellers often submit returns using just the headline purchase price, paying tax on a gain that is artificially inflated. For a property bought for £200,000, allowable acquisition costs are typically £8,000-£12,000.
3. Assuming PRR covers more than it does
Private Residence Relief only covers the period when the property was your only or main residence, plus the final 9 months. The “final 9 months” rule was reduced from 18 months in April 2020. Time spent abroad, working away, or letting the property after moving out does NOT qualify for PRR unless specific exceptions apply (job-related deemed occupation, temporary absences under HMRC’s published rules). Get the time apportionment right.
4. Forgetting to claim losses from other disposals
Capital losses in the same tax year MUST be set against gains in the same tax year before any annual exempt amount can be claimed. Losses brought forward from prior years can be used more strategically — only enough to bring the gain down to the £3,000 annual exempt amount, preserving the rest for future years. Sellers often forget about brought-forward losses entirely and overpay CGT.
5. Misunderstanding the 60-day reporting threshold
The 60-day filing requirement applies to disposals that result in a CGT liability. If you make a disposal at a loss, or if the gain is fully covered by PRR or other reliefs leaving no tax to pay, you generally don’t need to file the 60-day return — though you’ll still report the disposal on your Self Assessment. This nuance is widely misunderstood; many sellers file 60-day returns unnecessarily when no tax is owed.
Frequently Asked Questions
Do I pay CGT if I sell my main home?
Usually no. Private Residence Relief covers the entire gain on a property that has been your only or main residence throughout your period of ownership. The relief continues for the final 9 months even if you’ve moved out. CGT only bites if the property had a period as a buy-to-let, second home, or unused dwelling, or if part of it was used exclusively for business purposes.
What CGT rate applies if I’m a basic-rate taxpayer?
The first slice of your gain — up to the unused portion of your basic-rate band — is taxed at 18%. Anything above the basic-rate threshold is taxed at 24%. For example, if your other income is £40,000 and your taxable gain is £30,000, the first £10,270 (filling the basic-rate band up to £50,270) is at 18%, and the remaining £19,730 is at 24%. Plan the timing of disposals carefully if you have flexibility — splitting a sale across two tax years can sometimes use two basic-rate bands.
Can I deduct the cost of repairs from my CGT gain?
No. Repairs and maintenance are revenue expenses, not capital. They should have been claimed against rental income in the year they were incurred (or against your own tax position if the property was a second home). Capital improvements — which add to or upgrade the property’s value (extensions, new bathrooms replacing originals, loft conversions) — are deductible from the gain. The boundary between repair and improvement is sometimes contested by HMRC and worth documenting carefully.
What happens if I sell at a loss?
You record a capital loss. It is used first against any other gains in the same tax year. Any unused loss is carried forward indefinitely against future gains. You must claim the loss within 4 years of the end of the tax year of disposal to preserve the carry-forward, so report it on your Self Assessment even when there’s no immediate tax effect.
Do non-residents pay UK CGT on UK property?
Yes. Since April 2015, non-resident individuals pay CGT on disposals of UK residential property. The rules were extended to all UK land and property (including commercial) from April 2019. Non-residents must file a Non-Resident Capital Gains Tax return within 60 days of completion, regardless of whether there is tax to pay. The base cost is typically rebased to the property’s value at 6 April 2015 (residential) or 6 April 2019 (commercial), which often substantially reduces the chargeable gain on long-held property.
✅ Key Takeaways — CGT on Property 2026/27
- CGT rates on property are 18% (basic rate) and 24% (higher/additional rate) — annual exempt amount £3,000
- The 60-day reporting and payment deadline applies to all UK residential property disposals where CGT is due — missing it triggers automatic penalties
- Private Residence Relief exempts your main home — but letting periods, business use and large grounds can restrict the relief
- Spousal transfer before sale can save significant CGT where rates differ between partners
- Use our CGT calculator to model your position before completing
📚 Related reading
- Buy-to-Let: Personal vs Limited Company — CGT on disposal is one of the biggest costs of being in the wrong structure for the long term.
- Non-Resident UK Property Tax — Non-residents have different CGT exposure on UK property — but the 60-day rule still applies.
Shamim holds the CTA — the UK’s highest tax qualification — and advises on property tax, CGT, SDLT and portfolio incorporation. Full biography →
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