Capital Gains Tax on UK Property: Complete Guide for Landlords (2026/27)

Capital Gains Tax (CGT) is the tax on the gain made when a UK residential property is sold or disposed of at a profit. For UK individual landlords in 2026/27 the rates are 18% basic and 24% higher, with a £3,000 annual exempt amount. UK residents disposing of property where CGT is due must file a return and pay within 60 days of completion. Non-UK residents must file for every UK land disposal regardless of tax due. This pillar guide sets out the framework with onward links to the daughter pages covering specific topics.

The 2026/27 CGT framework at a glance

Item	2026/27 figure
Residential property CGT, basic rate	18%
Residential property CGT, higher rate	24%
Non-residential / commercial CGT (aligned from 30 October 2024)	18% / 24%
Annual exempt amount, individuals	£3,000
Annual exempt amount, trusts	£1,500
60-day reporting required for UK residents	Yes, where tax due
60-day reporting required for non-residents	Yes, every disposal
Basic-rate income tax band (where 18% CGT applies)	Up to £37,700 of taxable income
Higher-rate threshold	£50,270 gross income

The bands have been frozen at these levels since April 2021 and are scheduled to remain so until April 2028. The annual exempt amount was cut from £12,300 (pre-April 2023) to £6,000 (April 2023) to £3,000 (April 2024).

The five-step calculation

1. Net disposal proceeds: sale price less incidental costs of disposal (legal fees, estate agent fees).
2. Base cost: acquisition price plus incidental costs of acquisition (SDLT, legal, survey) plus capital enhancement (extensions, conversions). Revenue repairs are excluded.
3. Chargeable gain: net proceeds minus base cost, less any Private Residence Relief.
4. Losses and AEA: deduct in-year capital losses (compulsory), then brought-forward losses (only to the AEA floor), then the £3,000 AEA.
5. Apply rates: 18% on the portion within the basic-rate band, 24% on the portion above.

The mechanics with five worked examples are in our CGT calculation walkthrough.

Allowable costs in the base cost

The capital vs revenue boundary is the single most common source of CGT calculation errors. HMRC's PIM2020 sets out the framework on the income-tax side; the same logic applies for capital items entering the CGT base cost.

Cost type	Treatment
Purchase price	Capital (base cost)
SDLT including the 5% additional dwellings surcharge	Capital (base cost)
Purchase legal fees	Capital (base cost)
Survey on purchase	Capital (base cost)
Extension or conversion adding floorspace or bedrooms	Capital (base cost)
New bathroom or kitchen materially exceeding the original	Capital (uplift only)
Like-for-like replacement of bathroom or kitchen	Revenue (income tax expense, not CGT)
Roof repair after damage	Revenue
Full roof replacement (substantively different)	Capital (base cost)
Replacement of double glazing for single glazing	Revenue (HMRC accepts as repair, per PIM2020)
Mortgage interest and finance costs	Revenue (Section 24 mechanics apply; never CGT)
Estate agent fees on sale	Disposal cost (deducted from gross proceeds)
Legal fees on sale	Disposal cost

The general principle: restoration to the original condition is revenue; creation of something materially better, larger or different is capital. An item claimed as a revenue expense during ownership cannot also enter the CGT base cost (double-counting).

Private Residence Relief and Letting Relief

Private Residence Relief (PRR) reduces the gain on a property that was at some point the owner's only or main residence. The relief is time-apportioned: the gain attributable to qualifying main-residence periods is exempt; the gain attributable to non-qualifying periods is taxable. The final nine months of ownership always qualify as deemed occupation provided the property was at some point a main residence.

Letting Relief is still available post-April 2020 but is narrowly drawn: it requires the owner to have shared occupation with the tenant during a period of letting. The pre-April 2020 version (which applied without the shared-occupation requirement) was abolished. For most former-main-residence-now-let cases, PRR alone applies and Letting Relief does not.

The detailed mechanics (deemed occupation rules, multiple-property nominations, late nominations) are in our PRR step-by-step guide.

The annual exempt amount and rate bands

The annual exempt amount (AEA) of £3,000 is applied after any in-year and brought-forward losses. Each individual has their own AEA, so jointly owned property can use two AEAs against a single disposal where the owners are spouses or civil partners.

The CGT rate split (18% vs 24%) is determined by reference to total income. The basic-rate band is £37,700 of taxable income (after the personal allowance of £12,570 has been deducted). Where other income (employment, pensions, property profit) does not use the full basic-rate band, the unused portion is filled by the gain at 18%. Any remainder of the gain is taxed at 24%.

Trustees and personal representatives of deceased estates pay 24% throughout with no basic-rate slice.

The 60-day reporting and payment regime

UK residents disposing of UK residential property where CGT is due must file a Capital Gains Tax on UK property return and pay the tax within 60 days of completion. Where the gain is fully covered by PRR, capital losses or the AEA, no 60-day filing is required for UK residents.

Non-UK residents must file the 60-day return for every UK land disposal (residential, commercial, indirect interests in UK property-rich entities) regardless of whether tax is due.

The same disposal is reported again on the SA108 capital gains pages of the Self Assessment return where the seller is within Self Assessment. Tax paid through the 60-day return is offset against the final Self Assessment liability. Late filing penalties start at £100 from day 61, with daily and tax-geared penalties stacking thereafter. Full mechanics in our 60-day CGT deadlines page.

Spouse and civil partner transfers

Transfers between spouses or civil partners are on a no-gain-no-loss basis under section 58 TCGA 1992. The receiving spouse inherits the original base cost. On subsequent sale to a third party, each spouse is taxed on their share. This is one of the most efficient pre-sale planning levers:

• Joint ownership doubles the AEA available (two × £3,000)
• A pre-sale transfer to a lower-income spouse can place part of the gain in their basic-rate band at 18%
• Each spouse files their own 60-day return on their share
• The transfer must be a genuine transfer of beneficial ownership before disposal

For an income-mismatched couple, the saving can be material. The mechanics are routine but the timing must be clean: the transfer should be documented before the sale completes, and any Form 17 election (for income tax on joint property) is separate from CGT beneficial ownership and does not on its own change the CGT split.

Furnished Holiday Lets after the regime's abolition

The Furnished Holiday Let regime was abolished from 6 April 2025. The pre-abolition CGT advantages (Business Asset Disposal Relief at 10%, full capital allowances) are no longer available for ongoing operations. Disposals of former FHL properties on or after 6 April 2025 are taxed as ordinary residential property: 18%/24% with the £3,000 AEA, no BADR, no capital allowance protections.

Business Asset Disposal Relief itself remains for disposals of qualifying trading businesses, but the rates have risen:

• 10% up to 5 April 2025
• 14% from 6 April 2025
• 18% from 6 April 2026

The £1 million lifetime limit on BADR is unchanged. Even where BADR is available, the gap between BADR (18% from April 2026) and standard higher-rate residential CGT (24%) is now narrow.

Limited company ownership and CGT

Gains inside a UK limited company are taxed as part of corporation tax at 19% (small profits, augmented profits under £50,000) or 25% (main rate, over £250,000), with marginal relief between. No annual exempt amount. Indexation allowance (frozen at December 2017) may still apply to companies' pre-2018 base costs.

The company route changes the CGT mechanics entirely. The 60-day CGT on UK property service does not apply; gains are reported through the CT600. Extraction of cash gains from the company to the shareholder requires either dividend extraction (dividend tax at 10.75%/35.75%/39.35% above the £500 allowance), a salary, or pension contributions. The combined effective rate on extracted gains can exceed the personal 24%, but for retained gains used for reinvestment, the company route is often cheaper.

The case for incorporation is rarely a pure CGT play. It usually turns on the income tax mechanics (Section 24 mortgage interest restriction for individual residential landlords) and the long-hold compounding effect of corporation tax on retained profits. Detail in our BTL limited company complete guide.

The 2027 outlook

The April 2027 change announced in the Autumn Budget is the new property income tax rates (22%, 42%, 47% on rental profit), not a CGT change. CGT rates on residential property remain at 18% / 24% with no legislated change for April 2027 as of May 2026. Speculation about further CGT changes has circulated but is not legislated.

The 2027 income tax change still affects disposal-timing decisions because the after-tax economics of continuing to hold change. Detail in our confirmed vs speculated CGT 2027 changes page and our disposal-timing under the 2027 income tax change page.

Non-resident landlords

Non-UK residents have been within UK CGT on UK residential property disposals since April 2015 and on all UK land since April 2019. Key points:

• The 60-day return is mandatory for every disposal of UK land, whether or not tax is due
• Rebasing applied at 5 April 2015 for residential property (so the base cost for pre-April 2015 acquisitions is generally the 5 April 2015 market value)
• Rebasing applied at 5 April 2019 for non-residential property and indirect interests in UK property-rich entities
• Double tax treaty relief may apply where the same disposal is also taxed in the country of residence
• UK rates and reliefs broadly apply, including PRR if the property was at some point the non-resident's main residence (subject to the 90-day rule on what counts as residence for PRR purposes)

Common mistakes

• Missing the 60-day deadline. Automatic £100 penalty from day 61, escalating thereafter.
• Mis-classifying capital improvements as repairs (or vice versa). Double-counting an item as both a revenue expense and a base-cost item is a textbook HMRC challenge.
• Forgetting to include SDLT in the base cost. SDLT paid on acquisition is part of the base cost; many self-prepared computations omit it.
• Mis-computing PRR for former main residences. The time-apportionment is mechanical but easy to miscount, particularly around the final nine months and multiple-property nomination rules.
• Ignoring spouse split planning. A pre-sale transfer can save thousands; many sellers complete the sale solely in one name and miss the opportunity.
• Pre-emptive disposals based on un-legislated speculation. Rushing a sale to avoid a rumoured rate change often costs more than the change itself would have done.

Authoritative sources

• HMRC Capital Gains Manual – the authoritative operational reference
• gov.uk Capital Gains Tax rates – current rates, updated each tax year
• TCGA 1992 – the statutory framework on legislation.gov.uk
• HMRC CGT on UK property service – the filing portal
• HMRC Property Income Manual – for the income/capital boundary

We update this pillar after each fiscal event. Daughter pages cover specific topics in depth: the calculation walkthrough, the 60-day deadlines, the PRR step-by-step, the 2027 changes, the £3,000 AEA, and the disposal mechanics.