UK CGT on Property Disposal 2025/26 — the 60-Day Reporting Guide

What triggers CGT on a UK property?

Capital Gains Tax is charged on a disposal of a chargeable asset — and the legal definition of disposal goes well beyond a straightforward cash sale. On UK residential property the following events all count as disposals:

• An arm's-length sale — the obvious case, completion date is the disposal date for CGT.
• A gift (other than to a spouse or civil partner) — treated as a deemed disposal at market value.
• A transfer at undervalue — gain calculated on the market-value shortfall.
• Granting a long lease for a premium — a part-disposal that triggers a chargeable gain on the slice represented by the premium.
• Demolition followed by replacement — in certain circumstances the destruction of the building is itself a disposal.
• Exchange of properties — each side is making a disposal at the agreed market value.

What does not trigger CGT:

• A sale of your only or main residence fully covered by Private Residence Relief — no tax due, no 60-day report needed.
• Transfers to a spouse or civil partner while living together — these are no-gain-no-loss; CGT is deferred to a later disposal by the receiving partner.
• Death — there is no CGT on death itself; the asset passes to the personal representatives or beneficiary with a base cost reset to the probate value. (Inheritance Tax may apply on the estate, but that is a separate charge.)
• Gifts to charity — exempt.

2025/26 rates: 18% and 24%

Before 30 October 2024, residential property gains carried a premium over other assets — 18% for basic-rate taxpayers and 28% for higher and additional-rate taxpayers. The Autumn Budget 2024 cut the higher-rate property rate from 28% to 24% and simultaneously raised the rate on other assets from 10% / 20% to 18% / 24%. The net result: the residential premium is gone, and from that date all chargeable assets carry the same 18% / 24% structure.

The split applies after the £3,000 Annual Exempt Amount has been used. To work out which rate applies to which slice, you stack the chargeable gain on top of your taxable income for the year and see how much of the basic-rate band remains.

Worked rate-banding example

Notice that even though Sara's salary alone is comfortably below the higher-rate threshold, the interaction with a large one-off gain pushes most of the gain into the 24% band. This stacking effect is the single biggest surprise for first-time landlord sellers.

Private Residence Relief (PRR)

PRR is the relief that makes the sale of your home tax-free. The full relief applies if the property has been your only or main residence for the entire period of ownership. Partial relief applies when the property has been part main home and part something else — a let period, an extended absence beyond the allowed gaps, or a portion used exclusively for business.

Two PRR rules are particularly important for partial cases:

• Final 9 months always qualify. Even if you have moved out and let the property, the final 9 months count as deemed occupation. This was 36 months until April 2014, 18 months until April 2020, and now 9 months. People with disabilities or in care homes still get 36 months.
• Letting Relief is largely abolished. From 6 April 2020, Letting Relief is only available where the owner was in shared occupancy with the tenant (a true lodger situation). The old generous £40,000 relief for full BTL conversion of a former home is gone.

PRR mechanics — a 10-year example

Where actual occupation and final-9-month relief overlap (e.g. the seller lived there to the end), they are not double-counted — they simply produce 100% relief. The overlap rule prevents the formula from ever producing more than 100% relief.

Reporting and payment — the 60-day workflow

The mechanism is the Capital Gains Tax on UK Property Account, available at gov.uk. Open the account using your existing Government Gateway log-in, complete the return (proceeds, costs, reliefs, calculation), and pay the CGT by the same deadline. HMRC issues a 14-character payment reference once the return is submitted.

For taxpayers already in Self Assessment, the disposal must also be reported on the annual SA return. The CGT figure is recomputed using actual full-year income figures (which may differ from estimates used in the 60-day report), and any over- or underpayment is reconciled on 31 January following the tax year. For taxpayers not in SA, the 60-day return is normally the only filing required.

Penalties for missing the 60-day deadline:

• £100 immediate fixed penalty.
• £300 (or 5% of tax, if higher) after 6 months.
• A further £300 (or 5% of tax) after 12 months.
• Daily £10 penalties for up to 90 days where HMRC has issued a notice — rarely used in practice for property cases.
• Interest accrues on unpaid CGT from the original 60-day due date.

Joint ownership — doubling the shelter

When two or more people own the property, each owner makes their own disposal of their share and files their own 60-day return. Crucially, each owner has their own £3,000.00 AEA and their own unused basic-rate band. For a married couple owning 50/50, this means:

• Two AEAs of £3,000 = £6,000 of gain sheltered before any tax.
• Two separate band calculations — possibly keeping both spouses partially in the 18% bracket.
• If one spouse owns less, an inter-spouse transfer of part of the property before sale can rebalance the ownership to optimise band use. The transfer is no-gain-no-loss and base cost passes across.

Tenants in common vs joint tenants: In a tenancy in common the shares can be unequal and varied by deed before sale, giving full flexibility. Joint tenants always hold in equal shares; they would need to first sever the joint tenancy (a simple notice) and become tenants in common before adjusting the split. Either way, the change should happen meaningfully before completion to avoid anti-avoidance challenge.

Buy-to-let specifics

A pure BTL never qualifies for PRR (it has never been the owner's main residence) and, since April 2020, rarely qualifies for Letting Relief either. The full gain — after allowable costs and AEA — is therefore taxable. Allowable items on the BTL calculation:

• Original purchase price, including SDLT (and the BTL/second-home surcharge if paid), legal fees, survey fees, broker fees.
• Capital enhancement expenditure — loft conversion, extension, new bathroom where there was none. Not repairs and maintenance.
• Selling costs — estate agent commission, conveyancer fees, EPC, advertising.

Not allowable on the CGT computation:

• Repairs and maintenance during the let period — these were revenue expenses against rental income.
• Mortgage interest — also revenue, now with the 20% basic-rate credit under section 24 (see Section 24 guide).
• Like-for-like replacements (boiler, kitchen of the same standard).

Where a former main home has been let out, you compute one combined gain and apportion via PRR. You do notget to split the period into "PRR years" and "BTL years" and treat them as separate gains — HMRC always uses time-apportionment.

Special situations

Divorce and separation

From 6 April 2023, spouses or civil partners who are separating have an extended window for no-gain-no-loss transfers of assets: up to three tax years after the end of the year of separation (or until the date of the financial settlement, if earlier and recorded by court order). This replaced the harsh old rule that pegged no-gain-no-loss to the year of separation only. It allows negotiated property transfers as part of a settlement to avoid a CGT charge on the transferring spouse.

Inherited property

Inheritance does not trigger CGT. The base cost for the beneficiary is the probate value (market value at the date of death used for IHT). A later sale by the beneficiary uses this probate value as the starting point for the gain. If the property is sold within two years of death at less than the probate value, the personal representatives can sometimes claim an IHT loss-on-sale relief, recovering some of the IHT paid on the overvalued figure.

Enhancement expenditure

Capital improvements made by the owner during ownership are deductible from the gain provided they are still reflected in the value of the property at disposal. A loft conversion that adds a bedroom: yes. A swimming pool that has since been filled in: no, because the value is no longer reflected. Records (invoices, building-regulations certificates, architect's drawings) should be kept for the entire ownership period plus six years.

Mixed-use property

A property used part-residentially and part-commercially (a flat above a shop owned together) must be apportioned on a just and reasonable basis — typically by floor area and time. The residential portion follows the 18% / 24% structure; the commercial portion now also follows 18% / 24% post-October 2024. Apportionment evidence (a surveyor's letter, floor plans) should accompany the return.

Five-step disposal process

1. Calculate the gain — proceeds less original purchase price, allowable purchase costs, enhancement expenditure and selling costs.
2. Apply PRR — time-apportioned, including the final 9 months.
3. Apply the AEA — £3,000 per individual; each joint owner has their own.
4. Report via the CGT on UK Property Account — 60 days from completion, pay the calculated CGT.
5. Reconcile via Self Assessment — recompute with actual full-year income figures; pay any balance or claim a refund by 31 January.

Bringing it together

Capital Gains Tax on residential property is no longer the obscure end-of-year afterthought it once was. The 60-day reporting and payment deadline forces sellers to know their numbers — or a reasoned estimate of them — well before the Self Assessment cycle ever begins. The 2024 rate harmonisation has actually reduced the top property rate from 28% to 24%, but the AEA has shrunk dramatically from £12,300 (2022/23) to £3,000 (2024/25 onwards), meaning more transactions now generate a chargeable bill. Planning around joint ownership, PRR mechanics and spouse transfers is the single most effective way to minimise the tax legally. For complex cases — mixed-use, divorce, large enhancement claims, holiday lets — the cost of a brief consultation with a specialist is usually trivial compared with the tax at stake.