Capital Gains Tax on Property Sale UK 2026: Rates and Allowances

Frequently asked questions

What is the capital gains tax rate on property sales in 2026/27?

For residential property sales in 2026/27, CGT rates are 18% for basic rate taxpayers and 24% for higher and additional rate taxpayers. These rates apply to the gain after deducting the £3,000 annual exempt amount and allowable costs. The rate depends on where the taxable gain falls within your total income stack for the tax year, so a basic-rate taxpayer making a large gain can spill into the higher-rate CGT band as the gain pushes total income above £50,270.

How much is the CGT annual exemption for property in 2026/27?

The annual exempt amount for capital gains tax is £3,000 for 2026/27, unchanged from 2024/25. This is a significant reduction from £12,300 in 2022/23 and means most property sales now generate taxable gains, even with modest price increases. Trusts receive half the individual amount (£1,500 for 2026/27).

What costs can I deduct when calculating capital gains on property?

You can deduct the original purchase price, SDLT or LTT (Wales) and legal fees on purchase, estate agent fees and legal costs on sale, and capital improvements (not repairs). The improvements must add to the property's value, not maintain it: a new extension is capital; a replacement boiler is revenue. Indexation allowance no longer applies for individuals (abolished 6 April 2008); it remains for companies on property held before that date.

When do I need to report a property sale to HMRC?

UK residential property disposals where CGT is due must be reported and paid within 60 days of completion via HMRC's Capital Gains Tax on UK property service. The same window applies to non-residents disposing of UK residential property. Late filing penalties start at £100 and escalate, plus daily penalties after 3 months and 6 months. The annual self-assessment return reconciles the position with any over- or under-payment adjusted.

What is the order of calculation for a CGT property sale?

Five steps. (1) Sale proceeds minus costs of sale (estate agent, legal fees) equals net proceeds. (2) Original purchase price plus acquisition costs (SDLT/LTT, legal fees) plus capital improvements equals base cost. (3) Net proceeds minus base cost equals the gross gain. (4) Apply Principal Private Residence Relief if applicable (covered separately for former main residences). (5) Apply the £3,000 annual exempt amount. The remainder is the taxable gain, taxed at 18% (basic rate band) or 24% (higher rate band).

How does the 60-day reporting deadline interact with my self-assessment return?

The 60-day return is a standalone return for the specific property disposal with payment of estimated CGT due. The annual self-assessment return (filed by 31 January following the tax year) covers all your income and gains for the year and reconciles to the final CGT position. If you over-paid via the 60-day return, the difference is refunded after the self-assessment is processed. If you under-paid, the difference is collected. The 60-day return cannot be skipped on the basis that 'self-assessment will catch it later'.

What if I'm not sure how much CGT is due before the 60-day deadline?

Submit the return based on your best calculation and pay the estimated CGT. Use the highest credible estimate to avoid under-paying. The self-assessment reconciliation later in the year adjusts any over-payment back to you. The penalty for late filing exceeds any modest over-payment that gets refunded later, so default to submitting on time.

Does Private Residence Relief apply to a BTL sale?

Only if the property was at some point your main residence. Pure BTL ownership from day one does not attract PRR. If you previously lived in the property as your main home, you may qualify for partial PRR based on the proportion of ownership covered by actual residence plus deemed occupation periods plus the final 9 months. See our dedicated PRR calculation guide for the mechanics.

How does CGT work when selling a property through a limited company?

Gains realised inside a limited company are taxed as part of the company's corporation tax computation at 19% (small profits rate, profits under £50k) or 25% (main rate, over £250k), not at the personal CGT rates of 18/24%. The company does not have an annual exempt amount. To get the proceeds out to the landlord personally, dividend tax (10.75% / 35.75% / 39.35%) or salary applies. For long-hold strategies where proceeds are reinvested rather than extracted, the company route often wins on net tax.

What are the most common CGT mistakes landlords make on a property sale?

Five recurring patterns: (1) using exchange date rather than completion date as the disposal date; (2) missing capital improvements added years ago to the base cost; (3) forgetting to apply PRR to former main residences; (4) missing the 60-day reporting deadline; (5) double-counting the annual exempt amount across multiple disposals in the same tax year (the £3,000 applies once per tax year per individual, not per disposal). Each can cost from hundreds to thousands of pounds in incorrect tax.

Can I offset capital losses against a property gain?

Yes. Current-year capital losses must be set against current-year gains before applying the annual exempt amount. Brought-forward losses from prior years can be set against current-year gains AFTER the annual exempt amount is applied (so you preserve the £3,000 if the brought-forward losses cover the full gain). Losses are tracked indefinitely on your self-assessment return until used.

What if the property sale is part of a divorce or relationship breakdown?

Transfers between spouses or civil partners during marriage (or before decree absolute) are at no-gain-no-loss for CGT. Special rules in TCGA 1992 s.225B apply post-separation in some circumstances. The Mirror Trusts and Civil Partnership (Amendments to Schedules 1, 2 and 3 to the Capital Allowances Act 2001) Order 2024 (and related provisions from April 2023) extended favourable treatment for transfers within three years of separation. The tax treatment of divorce-related property transfers is fact-specific and often warrants specialist advice.

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