How does Capital Gains Tax work on a second home in 2026?

Full answer

When you sell a residential property that is not (or has not been) your main home, any gain above the annual CGT exempt amount is subject to Capital Gains Tax. **CGT rates on residential property 2026/27** - Basic-rate taxpayers: **18%** on gains that fall within their remaining basic-rate band - Higher and additional rate taxpayers: **24%** on all gains - The calculation stacks the gain on top of other income to determine the rate **Annual CGT exempt amount 2026/27** The Annual Exempt Amount is £3,000 per person. Gains below this threshold are free of CGT. **60-day reporting and payment** Disposals of UK residential property must be reported to HMRC and CGT paid within **60 days of completion**. This is done via the HMRC CGT UK property account (online). Failure to report within 60 days results in an automatic £100 penalty. **No Principal Private Residence (PPR) relief** PPR relief exempts your only or main residence from CGT. A second home or buy-to-let property does not qualify for PPR unless you genuinely live there as your main home. **Partial PPR** If a property was once your main home, PPR may partially apply. The final 9 months of ownership always qualify for PPR regardless of occupation. **Worked example** You bought a buy-to-let flat in 2015 for £180,000 and sell in October 2026 for £290,000. Gain = £110,000. Less AEA £3,000 = £107,000 chargeable gain. At 24% (higher-rate taxpayer) = £25,680 CGT. Report within 60 days of completion and pay by the same deadline. **Business Asset Disposal Relief** BADR does not apply to residential let property (it applies to trading businesses and qualifying shares).

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