Capital Gains Tax on Property in 2026/27: Rates, 60-Day Rule and PPR Relief
CGT on residential property is 18% or 24% in 2026/27. You must report and pay within 60 days of completion. Full guide to rates, Principal Private Residence relief, the letting relief rules, and a worked calculation.
CGT rates on residential property in 2026/27
Following the Autumn Budget 2024 (effective from 30 October 2024), CGT rates on residential property are:
| Taxpayer band | CGT rate on residential property |
|---|---|
| Basic-rate taxpayer | 18% |
| Higher or additional-rate taxpayer | 24% |
These rates apply after deducting the annual exempt amount (AEA) of £3,000 from the net gain.
To determine which rate applies, you add the taxable property gain on top of your other income for the year. If the combined total falls within the basic-rate band (up to £50,270 after personal allowance), that portion is taxed at 18%. Any gain that falls in the higher-rate band is taxed at 24%.
Example: You earn £38,000 salary. Basic-rate band remaining: £50,270 − £38,000 = £12,270. If your taxable property gain is £30,000, the first £12,270 is taxed at 18% (£2,209) and the remaining £17,730 at 24% (£4,255). Total CGT: £6,464.
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This is the rule that catches the most property sellers off-guard. Since April 2020 and reinforced by HMRC, you must both report and pay CGT on UK residential property within 60 days of the completion date of the sale.
This is not an annual payment at Self Assessment time — it is a standalone in-year obligation.
| Step | Deadline |
|---|---|
| Property sale completes | Day 0 |
| Report via UK Property Account (gov.uk) | Within 60 days |
| Pay estimated CGT | Within 60 days |
| Include in Self Assessment return | January 31 after end of tax year |
Late filing penalties start at £100 for a return filed 1 day late, with further penalties at 3 months, 6 months, and 12 months. Interest also accrues on unpaid tax at the HMRC rate (currently 7.25% per annum).
Where to report: HMRC's UK Property Account at gov.uk/report-and-pay-your-capital-gains-tax. You log in via Government Gateway, create a disposal, enter purchase and sale prices, any allowable costs, and the relief amounts. The system calculates the CGT and takes payment immediately.
Principal Private Residence (PPR) relief
PPR relief is the most important CGT relief for residential property. It exempts the proportion of the gain that relates to periods when the property was your main home.
How PPR is calculated
PPR is calculated as:
(Qualifying period ÷ Total period of ownership) × Total gain = Exempt amount
The qualifying period includes:
- Every month you lived in the property as your main home.
- Always: the final 9 months of ownership, regardless of whether you were living there.
The final 9-month period (previously 18 months, reduced in April 2020) is designed to allow time to sell after moving out — so you are not penalised for a slow sale market.
Worked example
James bought a flat in London in January 2015 for £200,000 (including stamp duty and conveyancing). He lived there as his main home until December 2023, then rented it out. He sold it in March 2027 for £350,000.
Step 1: Calculate total gain
| Sale price | £350,000 |
| Less purchase price and costs | −£200,000 |
| Total gain | £150,000 |
Step 2: Identify qualifying period
| Period | Months | Qualifies? |
|---|---|---|
| Jan 2015 – Dec 2023 (lived there) | 108 months | Yes (main home) |
| Jan 2024 – Jun 2026 (rented out) | 18 months | No |
| Jul 2026 – Mar 2027 (final 9 months) | 9 months | Yes (final period) |
| Total ownership | 135 months | |
| Qualifying period | 117 months |
Step 3: Calculate PPR relief
PPR = (117 ÷ 135) × £150,000 = £130,000 exempt.
Step 4: Taxable gain
| Total gain | £150,000 |
| Less PPR | −£130,000 |
| Sub-total | £20,000 |
| Less AEA | −£3,000 |
| Taxable gain | £17,000 |
Step 5: CGT due
James is a higher-rate taxpayer: 24% × £17,000 = £4,080.
This must be reported and paid within 60 days of March 2027 completion.
Letting Relief — what is left after 2020
Before April 2020, Letting Relief provided up to £40,000 of additional CGT exemption for former main homes that were let out. This was a valuable relief for accidental landlords.
From April 2020, Letting Relief was severely restricted. It now only applies if you shared occupancy with your tenants — i.e. you lived in part of the property while renting another part to tenants (a live-in landlord situation).
For most former-home landlords, Letting Relief is no longer available. The gain is either covered by PPR (for periods of occupation) or subject to CGT in full (for the non-PPR period).
Annual exempt amount (AEA) and joint ownership
The AEA is £3,000 for 2026/27 — down sharply from £12,300 in 2022/23. Despite the reduction, strategic use of the AEA remains important:
- Each co-owner has their own AEA. If a property is owned 50:50 by a married couple, both have £3,000 AEA → £6,000 of tax-free gain in total.
- Transfer between spouses is no-gain/no-loss. If a property is solely in one partner's name, consider transferring a share before selling to access the other partner's AEA. A solicitor can effect this inexpensively.
- AEA cannot be carried forward. If you sell in April (start of tax year) you cannot carry unused AEA forward. But if you have a choice of timing, selling late in the tax year may preserve the current year's AEA for other gains.
Allowable deductions — reduce your CGT base
Several costs can be deducted from the gain:
| Deductible | Not deductible |
|---|---|
| Purchase price (plus SDLT) | Mortgage interest |
| Conveyancing costs (purchase and sale) | Repairs and maintenance |
| Estate agent fees on sale | Annual insurance premiums |
| Capital improvements (extensions, loft conversions) | Utility costs |
| Survey and valuation fees | Letting agent fees |
Capital improvements are only deductible if they are still reflected in the property at the time of sale. A 2016 extension that is still part of the property in 2027 qualifies; a boiler replaced in 2016 that was then replaced again in 2022 does not.
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Stamp duty calculatorFull worked example — buy-to-let property
Sarah bought a two-bedroom house in Manchester in March 2018 for £180,000 (purchase price £172,000 + SDLT £5,200 + legal fees £2,800). She has rented it out as a buy-to-let ever since and has never lived there. She sells in August 2026 for £310,000 (gross), with estate agent fees of £4,650.
Purchase cost: £180,000 (total).
Sale proceeds: £310,000 − £4,650 fees = £305,350 net.
Total gain: £305,350 − £180,000 = £125,350.
No PPR applies (Sarah never lived there as a main home).
AEA: £3,000.
Taxable gain: £125,350 − £3,000 = £122,350.
Sarah is a higher-rate taxpayer:
CGT = 24% × £122,350 = £29,364.
This must be reported via the UK Property Account within 60 days of August 2026 completion — i.e. by late October 2026.
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- HMRC: Capital Gains Tax: rates and allowances
- HMRC: Report and pay CGT on UK property
- HMRC: Private Residence Relief
- HMRC: Letting Relief
- HM Treasury: Autumn Budget 2024 — CGT changes
Frequently asked questions
What is the CGT rate on residential property in 2026/27?
Residential property CGT rates in 2026/27 are 18% for basic-rate taxpayers and 24% for higher or additional-rate taxpayers. These rates apply to the taxable gain after deducting the £3,000 annual exempt amount.
When is the 60-day CGT reporting deadline?
You must report and pay any CGT due on UK residential property within 60 days of the completion date of the sale. This is done through HMRC's online UK Property Account service. Failure to report in time triggers late filing penalties starting at £100.
What is Principal Private Residence relief?
PPR relief exempts the proportion of a gain that relates to periods when the property was your main home. The final 9 months of ownership always qualify for PPR even if you were not living there — useful when you have moved before selling.
What is the CGT annual exempt amount in 2026/27?
The annual exempt amount (AEA) for individuals is £3,000 in 2026/27. Only gains above £3,000 are subject to CGT. The AEA cannot be carried forward if unused.
Does Letting Relief still apply?
Letting Relief was restricted in April 2020. It now only applies if you share occupancy of the property with your tenant — i.e. you live in the property at the same time as renting part of it out. The previous rules (relief of up to £40,000 for former main homes let out) no longer apply.
Can I deduct the cost of improvements when calculating CGT?
Yes. Capital improvement expenditure that is still reflected in the property at the time of sale can be deducted from the gain. Repairs and maintenance are not deductible (they are rental income expenses), but extensions, loft conversions, and new kitchen installations typically qualify as capital improvements.
What is Business Asset Disposal Relief (BADR) on property?
BADR (formerly Entrepreneurs' Relief) does not generally apply to residential property. It applies to disposal of qualifying business assets. For property, it can apply to furnished holiday lets under certain conditions — but HMRC announced in April 2025 that the FHL regime would be abolished, removing this route.
What if I sell property jointly with my spouse?
Each owner is assessed on their share of the gain. A 50:50 ownership split means each has a £3,000 AEA — so a couple effectively has £6,000 of exempt gains. If the property is in one partner's name, consider transferring a share before selling to utilise both AEAs.
How do I report CGT on property to HMRC?
Use HMRC's UK Property Account at gov.uk/report-and-pay-your-capital-gains-tax. You report the disposal, estimate the CGT due, and pay within 60 days of completion. If you also file Self Assessment, you include the same disposal on your annual return — any over or underpayment is adjusted there.
What is the CGT rate on non-residential assets in 2026/27?
Non-residential assets (shares, funds, investment property that is not residential) are taxed at 18% (basic rate) or 24% (higher rate) since October 2024. Before the Autumn 2024 Budget these were 10%/20%, so rates have increased for non-property assets too.
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