Capital Gains Tax on Property UK 2026/27: 18%/24%, 60-Day Reporting & PRR

Quick answer

When you sell a UK residential property that isn't your main home — a buy-to-let, a second home, or an inherited house — you may owe Capital Gains Tax on the profit. For 2026/27 the residential rates are 18% on the slice of gain that sits within your basic-rate band and 24% on anything in the higher or additional-rate band. Only the first £3,000 of total gains is exempt, and there's a strict 60-day deadline to report and pay. Your own home is almost always exempt thanks to Private Residence Relief. This guide covers each piece.

What is taxed — and what isn't

CGT applies to the gain, not the sale price: roughly the disposal proceeds minus what you paid, minus allowable costs and reliefs. Two big exemptions shape who actually pays:

• Your only or main home is normally exempt under Private Residence Relief (PRR).
• Transfers between spouses and civil partners are CGT-free.

So the people who pay CGT on property are typically landlords, second-home owners, and people who inherit or are gifted property they don't live in. Estimate your bill with the

.

The 2026/27 rates: 18% and 24%

Residential property has its own CGT rates, higher than those on shares:

• 18% on the part of the gain that falls within your remaining basic-rate band, and
• 24% on the part that falls into the higher or additional-rate band.

To work out which applies, you stack the taxable gain on top of your income for the year. If your income already uses up the basic-rate band (i.e. exceeds £50,270), the whole gain is taxed at 24%. If you have unused basic-rate band, part of the gain enjoys the 18% rate.

Worked example: a buy-to-let sale

Tom, a higher-rate taxpayer, sells a rental flat:

• Sale price: £280,000
• Purchase price: £200,000
• Buying and selling costs (legal, agent, SDLT on purchase): £12,000
• Capital improvements (new extension): £8,000

Gain = £280,000 − £200,000 − £12,000 − £8,000 = £60,000. Less the £3,000 annual exemption = £57,000 taxable. As a higher-rate taxpayer, the whole £57,000 is taxed at 24% = £13,680.

If Tom's income had left, say, £10,000 of basic-rate band unused, that £10,000 of gain would be taxed at 18% and the remaining £47,000 at 24%, slightly reducing the bill.

The £3,000 annual exempt amount

Every individual has an annual CGT exemption — but it has shrunk dramatically. It was £12,300 as recently as 2022/23; for 2026/27 it is just £3,000. This means even modest property gains now produce a taxable result that previously would have been covered. There is no carry-forward: use it in the year or lose it.

Allowable deductions: don't overpay

Many people overpay CGT by forgetting deductible costs. You can subtract from the gain:

• Purchase and sale costs: legal fees, estate agent fees, surveys, and the Stamp Duty you paid when buying.
• Capital improvements: extensions, a new conservatory, a first central-heating installation — anything that enhances the property. Routine repairs and decoration do not count (those are deductible against rental income instead — see our rental income guide).
• The annual £3,000 exemption.

Keep every invoice from the day you buy. On a £60,000 gain, an extra £15,000 of properly evidenced improvements saves £3,600 at 24%.

The 60-day reporting trap

This is where landlords most often slip up. If you sell UK residential property and there's CGT to pay, you must report the gain and pay the tax within 60 days of completion, using HMRC's standalone "Capital Gains Tax on UK Property" online service. This is separate from your annual Self Assessment return — you do it now, then also include the disposal on your tax return later, with the 60-day payment credited against the final figure.

Miss the 60-day window and you face automatic penalties (£100, escalating) plus interest, even if you'd have reported it on your annual return anyway. Because completion dates can slip and conveyancing is hectic, it's easy to forget — set a reminder the day contracts complete.

Private Residence Relief (PRR)

If the property has been your only or main residence for the whole time you owned it, PRR exempts the entire gain — which is why most people never pay CGT on their home. The nuances:

• Final nine months of ownership always qualify, even after you've moved out — helpful if your sale overlaps a new purchase.
• Periods of letting while it wasn't your main home reduce the relief proportionately (though Letting Relief may help if you shared occupation with the tenant).
• Two homes: you can nominate which counts as your main residence for PRR, within time limits — valuable for those with a second home.
• Large grounds over about half a hectare, or part of the home used exclusively for business, can restrict relief.

A property that was your home for part of the period and a rental for the rest gets partial PRR, apportioned by time. Our guide on CGT for second homes works through a mixed-use example.

Using both spouses' allowances

Because transfers between spouses and civil partners are CGT-free and each person has their own £3,000 exemption and own tax bands, jointly owning a property before sale can meaningfully cut the bill:

• Two exemptions = £6,000 of gain sheltered instead of £3,000.
• A lower-earning spouse may have unused basic-rate band, applying 18% to part of the gain that would otherwise be taxed at 24%.

The transfer of a share must be genuine and completed before the sale; you can't retrospectively allocate the gain. For a couple selling a buy-to-let, this is one of the simplest and most effective planning steps. Model both scenarios with the

.

Offsetting losses

If you've made capital losses — on other property, shares or crypto — you can offset them against property gains in the same year, or carry unused losses forward indefinitely (once reported to HMRC, normally within four years). Crystallising a loss on a poorly-performing asset in the same tax year as a property sale is a legitimate way to reduce the taxable gain. See our

.

Gifting property and the gift-with-reservation trap

Gifting a property — to children, say — is a disposal at market value for CGT, even though no money changes hands. So if you give away a buy-to-let that's risen in value, you can owe CGT on the gain as if you'd sold it, despite receiving nothing. This surprises many parents trying to help their children onto the ladder. There's a further sting for Inheritance Tax: if you give away your home but continue to live in it rent-free, it's a gift with reservation of benefit and stays in your estate for IHT regardless — so you get the CGT disposal and no IHT saving. Genuine gifts of property need careful structuring; the interaction of CGT, IHT and SDLT means this is firmly territory for professional advice.

Off-plan, mixed-use and the "garden" question

A few common edge cases catch people out:

• Mixed-use property (a flat above a shop) is split: the residential portion attracts the 18%/24% rates and the commercial portion the lower 18%/24% main rates for non-residential assets — apportioned reasonably.
• Large gardens and grounds: PRR on your main home covers grounds up to about half a hectare (roughly 1.2 acres). Sell off a chunk of a larger garden as a building plot and the excess can be taxable.
• Developing your own home: if you buy, renovate and flip properties as a business, HMRC may treat the profit as trading income (subject to income tax and NI) rather than a capital gain — and PRR won't apply if the property was bought mainly to sell at a profit.

If your situation isn't a clean "sold a rental I'd held for years," check the detail before assuming the simple 18%/24% treatment applies.

Timing the disposal across tax years

Because the annual exemption is use-it-or-lose-it and resets each 6 April, the timing of a sale matters. If you have flexibility on completion dates, straddling a tax-year end can let you use two years' £3,000 exemptions against a single large gain — for example, by disposing of a share of jointly-held assets either side of 5 April, or simply completing in early April rather than late March to push the gain into a year where you have unused basic-rate band. You can't artificially split a single property sale, but where you hold multiple assets or shares in a property, sequencing disposals across years is a legitimate way to spread gains and soak up more exemptions and basic-rate band. Always weigh this against market timing and your own circumstances rather than letting tax wag the dog.

What about inherited property?

When you inherit a property there's no CGT at the point of inheritance (Inheritance Tax may apply to the estate instead — 40% above the £325,000 threshold plus the £175,000 residence nil-rate band). Your CGT base cost becomes the probate value at the date of death. If you later sell for more than that value, the gain since death is subject to CGT at 18%/24% — a frequent surprise for beneficiaries who hold the property for a while before selling.

How CGT interacts with your income tax band

A point worth labouring because it changes the bill: the 18%/24% split depends on your income, so two people with identical gains can pay very different amounts. The taxable gain is stacked on top of your income for the year, and only the portion that still fits within your remaining basic-rate band (up to £50,270) gets the 18% rate — everything above is 24%. This means a year in which your income is unusually low (a career break, a gap between jobs, the first year of retirement before drawing much) can be the cheapest time to realise a property gain, because more of it falls into the 18% band. Conversely, selling in a high-bonus year wastes the lower rate entirely. If you have any control over when you complete, modelling the gain against your expected income for that tax year — using the

alongside the — can save thousands.

Keep the paperwork from day one

Almost every avoidable CGT overpayment traces back to missing records. From the moment you buy, keep: the completion statement showing purchase price and SDLT; legal and survey invoices; every capital improvement receipt; and, for an inherited property, the probate valuation. When you sell, keep the estate agent and conveyancing invoices. Years can pass between buying and selling, and reconstructing £20,000 of improvement costs from memory under HMRC scrutiny is both stressful and likely to leave money on the table. A simple folder per property, updated as costs arise, is the cheapest tax planning you'll ever do — every properly evidenced £1,000 of cost saves up to £240 of CGT at the 24% rate.

Putting it all together

Capital Gains Tax on property in 2026/27 comes down to a few moving parts: residential rates of 18% and 24%, a stingy £3,000 annual exemption, a strict 60-day report-and-pay deadline that's separate from Self Assessment, and the powerful Private Residence Relief that keeps most main homes tax-free. The biggest wins come from claiming every allowable cost and improvement, using both spouses' exemptions and bands where the property is jointly owned, and never missing the 60-day window. Run your figures through the

before you exchange, and check the income interaction with the .

This article is general information, not tax advice. Figures use 2026/27 UK rates for England, Wales and Northern Ireland. Property CGT is complex — consider professional advice before a disposal.