Selling a Buy-to-Let Property: Working Out Your CGT Bill (2026/27)
A step-by-step walkthrough of calculating Capital Gains Tax when you sell a buy-to-let property in 2026/27 — allowable costs, the 18%/24% rates, the 60-day reporting deadline, and a full worked example.
The building blocks of a buy-to-let CGT calculation
Working out CGT on a buy-to-let sale comes down to four steps: establish the gain, deduct allowable costs, deduct the annual exempt amount, then apply the right rate to what's left based on your income for the year.
The gain itself starts from a simple subtraction — sale price minus purchase price — but the "allowable costs" step is where most of the detail (and most of the mistakes) happen, because not every cost you've incurred over the years of ownership is deductible against the gain.
What reduces the gain — and what doesn't
| Cost type | Deductible against the gain? | Example |
|---|---|---|
| Original purchase price | Yes | Price paid to acquire the property |
| SDLT and legal fees on purchase | Yes | Stamp duty, conveyancing fees at acquisition |
| Capital improvements | Yes | Extension, loft conversion, new kitchen that adds value |
| Estate agent and legal fees on sale | Yes | Selling costs incurred to dispose of the property |
| Routine repairs and maintenance | No — deducted against rental income instead | Repainting, fixing a leak, boiler servicing |
| Mortgage interest | No | Relieved separately via the 20% tax credit under Section 24 |
The rates: 18% and 24%, and why your income matters
Once you've deducted allowable costs and the £3,000 annual exempt amount, the remaining taxable gain is split across two rates depending on your total taxable income for the year, including the gain itself:
| Band | Rate |
|---|---|
| Gain within your remaining basic-rate band | 18% |
| Gain above the basic-rate band (higher/additional rate taxpayers, or the excess portion) | 24% |
This means the same £100,000 gain can produce very different tax bills for two different sellers — someone with little other income in the tax year might have most of their basic-rate band available and pay 18% on a large chunk of the gain, while someone already earning £60,000 a year in salary will have used up their basic-rate band entirely and pay 24% on the whole gain.
The 60-day reporting deadline
Unlike most Income Tax and CGT reporting, which follows the annual Self Assessment timetable, UK residential property gains have their own fast-track deadline: report and pay estimated CGT within 60 days of the sale completing, using a dedicated CGT UK Property return submitted through HMRC's online service.
This applies to the vast majority of profitable buy-to-let sales — not just large gains — so it's worth planning for as soon as a sale is agreed, rather than waiting until completion to think about the tax position. The 60-day return requires an estimate of the gain and an estimate of the tax due, calculated using your best estimate of your total income for the year; any difference is reconciled later through your annual Self Assessment return.
Worked example: selling a buy-to-let flat
Consider a landlord who bought a flat in 2015 and sells it in 2026/27.
| Item | Amount |
|---|---|
| Purchase price (2015) | £180,000 |
| SDLT and legal fees on purchase | £6,000 |
| Kitchen extension (capital improvement) | £9,000 |
| Sale price (2026) | £320,000 |
| Estate agent and legal fees on sale | £8,000 |
Step 1 — total allowable costs:
£180,000 (purchase) + £6,000 (purchase costs) + £9,000 (improvement) + £8,000 (sale costs) = £203,000
Step 2 — the gain:
£320,000 (sale price) − £203,000 (allowable costs) = £117,000
Step 3 — deduct the annual exempt amount:
£117,000 − £3,000 = £114,000 taxable gain
Step 4 — apply the rates. Suppose this landlord's salary uses up most of their basic-rate band, leaving only £2,000 of basic-rate headroom before the gain is calculated:
| Portion of gain | Rate | Tax |
|---|---|---|
| £2,000 (remaining basic-rate band) | 18% | £360 |
| £112,000 (remainder) | 24% | £26,880 |
| Total CGT due | £27,240 |
That £27,240 must be reported and paid within 60 days of completion, then reconciled through this landlord's Self Assessment return for the same tax year. Run your own numbers through
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Open CGT Property calculatorHow the 60-day return actually works in practice
The 60-day CGT UK Property return is filed through HMRC's dedicated online service, separate from your normal Self Assessment login, and requires a "Capital Gains Tax on UK Property" account to be set up before you can report a disposal. In practice, most sellers (or their accountant or conveyancing solicitor) start this process as soon as a sale completes, because the estimate needs to be reasonably accurate — HMRC expects a genuine best estimate of the gain and the resulting tax, using the information available at the time, such as an up-to-date estimate of your total income for the year.
A few practical points make the process smoother:
- You'll need a Government Gateway account and, if you don't already have one, a Capital Gains Tax on UK Property account specifically.
- The estimate should use your best available figures for income, allowable costs and the gain — it doesn't need to be perfectly precise, but it should be a genuine, reasonable estimate rather than a placeholder.
- Payment is due at the same time as the return — both the 60-day reporting deadline and the payment deadline fall on the same date.
- If your circumstances change materially between the 60-day return and your annual Self Assessment (for example, your income for the year turns out higher or lower than estimated), the balancing adjustment happens through Self Assessment, not through an amended 60-day return in most cases.
Worked example: a smaller gain within the basic-rate band
Not every buy-to-let sale produces a six-figure gain taxed mostly at 24%. Consider a landlord who bought a smaller flat in 2019 and sells it in 2026/27 after a more modest period of ownership and price growth, with relatively little other income in the tax year.
| Item | Amount |
|---|---|
| Purchase price (2019) | £140,000 |
| Purchase costs (SDLT, legal fees) | £4,500 |
| Sale price (2026) | £172,000 |
| Selling costs (agent, legal fees) | £5,500 |
Gain: £172,000 − £140,000 − £4,500 − £5,500 = £22,000
After the annual exempt amount: £22,000 − £3,000 = £19,000 taxable gain
If this landlord has very little other income for the year — say they're semi-retired with a modest pension — most or all of their basic-rate band is available, so the entire £19,000 gain could be taxed at 18% rather than 24%:
£19,000 × 18% = £3,420 CGT due
This example shows how much the seller's overall income position for the year of sale changes the outcome — the same £22,000 gain could easily produce a bill roughly a third higher if the seller had enough other income to push some or all of it into the 24% band instead.
Regional variations: Scotland and Wales
CGT itself is a UK-wide tax, set by the UK government and applied the same way regardless of whether the property being sold is in England, Scotland, Wales or Northern Ireland — unlike Income Tax, which has separate Scottish rates and bands, or SDLT, which is replaced by LBTT in Scotland and LTT in Wales. This means a landlord selling a buy-to-let in Edinburgh or Cardiff calculates CGT using exactly the same £3,000 annual exempt amount and 18%/24% rates as a landlord selling an equivalent property in Manchester. The one place regional Income Tax bands can indirectly matter is in determining which UK-wide CGT rate applies, since the "basic-rate band" test for CGT purposes uses the UK-wide bands, not the Scottish Income Tax bands, even for a Scottish resident seller.
Reducing the bill legitimately
A few levers can reduce the taxable gain or the rate applied to it before you complete:
- Timing improvements correctly — make sure genuine capital improvements are documented separately from repairs throughout ownership, not reconstructed at the point of sale.
- Using losses — capital losses from other disposals in the same tax year, or brought forward from previous years, can offset the gain before the annual exempt amount is applied.
- Joint ownership — if the property is jointly owned with a spouse or civil partner, each owner's £3,000 exempt amount and own tax band apply to their share of the gain separately.
- Private Residence Relief — if you lived in the property before letting it out, part of the gain relating to that period (plus a final period of ownership) may be exempt.
Checklist before you complete
- Gather every receipt for capital improvements — HMRC can query the figures, and undocumented claims are routinely challenged.
- Separate repair costs (already claimed against rental income) from capital improvement costs (claimed against the gain) — don't double-count either.
- Estimate your total income for the tax year of sale so you can apply the right split between 18% and 24%.
- Diarise the 60-day deadline from the completion date, not the exchange date.
- Remember the 60-day return isn't the end of the story — the disposal still needs to appear on your annual Self Assessment return.
Frequently asked questions
How much CGT will I pay when I sell a buy-to-let property?
Residential property gains are taxed at 18% for the portion that falls within your remaining basic-rate band, and 24% for any gain above that (i.e. for higher and additional-rate taxpayers, or the part of a gain that pushes a basic-rate taxpayer into higher-rate territory). Everyone gets a £3,000 annual exempt amount to deduct from their total gains for the year before tax is calculated, regardless of which rate applies to the rest.
What costs can I deduct from a buy-to-let gain?
You can deduct the original purchase price, SDLT and legal fees paid on purchase, estate agent and legal fees paid on sale, and capital improvement costs — things like an extension, a loft conversion, or a new kitchen that adds lasting value, as opposed to routine repairs and maintenance, which aren't deductible for CGT (though they may have been deductible against rental income each year instead). Keep every receipt and invoice, since HMRC can query the figures on a CGT UK Property return.
What's the difference between a repair and a capital improvement for CGT purposes?
A repair restores something to its previous condition — fixing a leaking roof, repainting, replacing a broken boiler like-for-like — and is typically deducted against rental income in the tax year it's incurred, not against the eventual capital gain. A capital improvement adds something new or enhances the property beyond its original condition — an extension, a converted loft, a new conservatory — and is instead added to your acquisition cost, reducing the gain when you sell. Getting this classification wrong in either direction can distort both your annual rental profit and your eventual CGT bill.
What is the 60-day CGT reporting deadline?
If you make a taxable gain on UK residential property — which almost always applies to a buy-to-let sale with any profit — you must report the gain and pay the estimated CGT to HMRC within 60 days of the sale completing, using a separate CGT UK Property return, not just your annual Self Assessment return. This is much faster than the usual Self Assessment timetable, and missing the 60-day window triggers penalties and interest even if you eventually report everything correctly on your annual return.
Do I still need to include the gain on my Self Assessment return if I've already reported it within 60 days?
Yes. The 60-day CGT UK Property return is a payment-on-account style report, not a substitute for your annual Self Assessment return. You still need to include the disposal on your Self Assessment for the relevant tax year, at which point the tax already paid via the 60-day return is credited against your final liability, with any balancing adjustment (up or down) settled through Self Assessment in the normal way.
How does my income affect the CGT rate on a buy-to-let sale?
Your CGT rate on the gain depends on your total taxable income for the year, including the gain itself for the purposes of working out which band it falls into. If your income plus the gain stays within the basic-rate band (up to £50,270 of taxable income), the portion of the gain within that remaining space is taxed at 18%; any gain above that band — because your income already uses up the basic-rate band, or because the gain itself pushes you into higher-rate territory — is taxed at 24%. This means the same size of gain can result in a very different tax bill depending on your salary or self-employment income in the same tax year.
Can I use losses from other CGT disposals to reduce the bill?
Yes — capital losses from other asset disposals in the same tax year, or unused losses brought forward from previous years, can be offset against a buy-to-let gain before the annual exempt amount is applied. This is worth checking carefully before completing a 60-day return, since including an available loss can materially reduce the CGT due, and losses must generally be claimed within four years of the tax year in which they arose to remain usable.
Does it matter if I owned the property jointly with a spouse or partner?
Yes — if you and a spouse or civil partner jointly own the buy-to-let, each of you has your own £3,000 annual exempt amount and your own income tax band to apply to your share of the gain, which can significantly reduce the combined household CGT bill compared with one person owning the whole property outright. Unmarried joint owners are also each taxed on their own share of the gain, based on their beneficial ownership percentage, which doesn't have to be 50/50 if it's documented differently.
What if I lived in the property myself before letting it out?
If the property was your main home for part of the time you owned it before becoming a buy-to-let, you may be entitled to Private Residence Relief for that period (plus a final period of ownership), which reduces the taxable proportion of the gain. This calculation apportions the total gain between the time it was your home and the time it was let out, and can meaningfully reduce the CGT bill — it's a common scenario for someone who lived in a flat, then moved out and let it, before eventually selling.
What happens if I don't report and pay within 60 days?
Missing the 60-day deadline triggers an automatic late-filing penalty, which increases the longer the return remains outstanding, plus daily interest on any CGT paid late. HMRC treats the 60-day CGT UK Property return as a strict, standalone deadline separate from the annual Self Assessment timetable, so 'I was going to include it on my tax return anyway' isn't a defence against the penalty for missing the 60-day window.
Should I get a professional valuation or use the sale price for the calculation?
For a straightforward arm's-length sale on the open market, the actual sale price (less selling costs) is what you use for the gain calculation — no separate valuation is normally needed. A professional valuation becomes relevant mainly when the disposal isn't at arm's length, such as a transfer to a family member or into a trust below market value, where HMRC requires you to use the property's market value rather than whatever price (if any) was actually paid.
Related reading
Becoming a Landlord for the First Time: A 2026/27 Tax Checklist
A first-time landlord's practical 2026/27 tax checklist — registering for Self Assessment, declaring rental income, allowable expenses, the Section 24 mortgage interest restriction, and what happens when you eventually sell.
Buy-to-Let: Common First-Time Landlord Mistakes in 2026/27
The most common mistakes new UK buy-to-let landlords make in 2026/27 — from underestimating costs to skipping compliance — and how to avoid them.
Buy-to-Let Interest Cover Ratio (ICR): Worked Example for 2026/27
How lenders calculate the interest cover ratio (ICR) on buy-to-let mortgages in 2026/27, with a full worked example showing how much rent you need for a given loan size.