UK CGT rates on residential property — 2025/26
Capital gains tax on residential property sale in the UK 2025/26:
| Your income tax band | CGT rate on residential property | Compare to other assets |
|---|---|---|
| Basic rate (£12,571 - £50,270 total income) | 18% | 10% on shares / other assets |
| Higher rate (£50,271 - £125,140) | 24% (was 28% pre-Oct 2024) | 20% on shares / other assets |
| Additional rate (£125,141+) | 24% | 20% on shares / other assets |
The residential CGT rate for higher-rate taxpayers dropped from 28% to 24% with effect from 30 October 2024 (Autumn Statement 2024). The 18% basic-rate rate stayed the same. Disposals before 30 October 2024 still attract the 28% rate.
The CGT band you fall into depends on your total income for the year (income + gain). If you're a basic-rate taxpayer but the property gain pushes your total above £50,270, the portion of the gain above that threshold is taxed at 24%.
The £3,000 annual exempt amount
The Capital Gains Tax annual exempt amount for 2025/26 is £3,000 per individual. This is the first £3,000 of total capital gains in the tax year that's tax-free, regardless of asset type.
The annual exempt amount has been progressively reduced:
- 2022/23: £12,300
- 2023/24: £6,000
- 2024/25 onwards: £3,000
For a married couple selling a jointly-owned BTL, both partners get the £3,000 allowance — a combined £6,000 of gain is tax-free. Spousal transfers (transferring shares of ownership before sale) are CGT-free, so a landlord who solely owns can transfer a 50% interest to their spouse before sale to double the allowance — though this needs to be a genuine transfer with proper paperwork, not a sham.
How to calculate the capital gain
The taxable gain is:
What counts:
- Acquisition cost: the original purchase price plus SDLT, legal fees, surveys, mortgage arrangement fees paid at acquisition.
- Allowable improvements: capital expenditure that materially improved the property — extensions, structural changes, new bathrooms or kitchens, etc. Repair and maintenance (decoration, repairs, replacing worn-out fittings) does NOT count — that's revenue expenditure already deducted against rental income.
- Selling costs: estate agent fees, solicitor fees, mortgage early repayment charges, EPC commissioning, etc.
Worked example: bought a BTL for £180,000 in 2014, sold for £290,000 in 2025/26. Estate agent fees £3,000, solicitor £900. £15,000 spent on extension in 2019.
- Sale price: £290,000
- Less acquisition cost (£180,000 + £2,500 SDLT + £900 legal): £183,400
- Less improvement: £15,000
- Less selling costs: £3,900
- Gross gain: £87,700
- Less £3,000 AEA: £84,700
- Taxable gain
If the seller is a higher-rate taxpayer, CGT = £84,700 × 24% = £20,328.
PRR (Private Residence Relief) and letting relief — restricted
If you ever lived in the property as your main residence before letting it, Private Residence Relief (PRR) shelters part of the gain:
- The full period of actual residence is exempt from CGT
- Plus the final 9 months of ownership is exempt regardless of whether you lived there at that point (reduced from 18 months in April 2020, and from 36 months before that)
Worked example: bought a property in 2010, lived in it for 5 years, let it for 10 years, sold in 2025. Total ownership: 15 years (180 months). Period exempt under PRR: 60 months (residence) + 9 months (final 9) = 69 months. PRR fraction: 69/180 = 38.3%.
If the total gain is £100,000, PRR shelters £38,333 of it. £61,667 remains taxable (before AEA).
Letting relief was historically a further relief for properties that had been both a main residence AND let. From April 2020, letting relief is now restricted to landlords who lived in the property at the same time as letting it (e.g. lodger arrangement). For landlords who let their former home after moving out, letting relief no longer applies.
60-day CGT reporting requirement
UK residents selling a residential property and incurring a capital gain must report and pay the CGT within 60 days of completion (extended from 30 days in April 2021).
The 60-day return is filed via HMRC's "Report and pay Capital Gains Tax on UK property" service. You'll need:
- Government Gateway login
- Sale completion date and selling price
- Acquisition cost + dates
- Allowable expenses and improvements
- Calculated gain and CGT due
The CGT payable is also due within the same 60 days. Penalties for late filing are £100 immediately + £10/day after 3 months + £300 or 5% (whichever higher) at 6 months. Late payment incurs interest plus a 5% penalty after 30 days.
You also still need to include the disposal on your annual Self-Assessment return at year-end — the 60-day return is a payment-on-account, not a final settlement.
CGT planning moves before sale
- Transfer 50% ownership to your spouse before sale. CGT-free between spouses. Uses both £3,000 annual exempt amounts. Saves up to £720 of CGT (24% × £3,000) — small but adds up. Must be a genuine transfer with proper conveyancing paperwork.
- Time the sale across tax years. If you have other gains in the same tax year, splitting a sale that completes near the tax-year boundary (5 April) can use two years' worth of AEAs and band capacity.
- Offset against capital losses. If you've made capital losses on other assets in the same year, or carried-forward losses from previous years, these offset the gain pound-for-pound.
- Defer via incorporation (Section 162). Transferring property to your own Ltd company can qualify for Section 162 incorporation relief if the property activity is a "business" — see the full guide. This defers the CGT rather than eliminating it.
- Replace your principal residence. If you've moved out and the property qualifies, the final 9 months still get PRR — try to time the sale within that window.
- Consider EIS reinvestment. Investing the proceeds in qualifying EIS shares can defer the CGT bill. Specialist advice required.