Capital gains tax on property sale UK 2026 remains a significant consideration for landlords and property investors. With the annual exempt amount continuing its reduction and property values remaining high, understanding your CGT liability is crucial when planning property disposals.
The rules around capital gains tax can significantly impact your net proceeds from a property sale. Getting the calculations wrong or missing available reliefs could cost thousands in unnecessary tax.
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CGT Rates and Annual Exempt Amount for 2026
For the 2026/27 tax year, the capital gains tax rates on residential property disposals are:
- 18% for basic rate taxpayers
- 24% for higher and additional rate taxpayers
These are the definitive rates for property sales completing in the 2026 tax year. They apply to the taxable gain, which is calculated after deducting your annual exempt amount and all allowable costs. Your income tax band for CGT purposes is determined by adding the taxable gain to your other taxable income (like salary or rental profits) for the year.
Example: A landlord with a £35,000 salary makes a £60,000 property gain. The personal allowance and basic rate band for 2026/27 mean they would pay 18% CGT on the first portion of the gain that falls within the remaining basic rate band, and 24% on the portion that pushes them into the higher rate band.
The annual exempt amount for capital gains tax was cut sharply and has stood at £3,000 since April 2024:
- 2026/27: £3,000
- 2025/26: £3,000
- 2024/25: £3,000
- 2023/24: £6,000
This dramatic reduction from the previous £12,300 means most property sales now generate taxable gains. Even modest price increases since purchase often exceed the £3,000 exemption.
Calculating Your Capital Gain
Your capital gains tax on property sale UK 2026 is calculated on the gain, not the sale price. The basic calculation is:
Sale proceeds - Purchase costs - Improvement costs - Sale costs = Taxable gain
Allowable Deductions
You can deduct several costs when calculating your gain:
- Original purchase price
- Stamp duty and legal fees on purchase
- Estate agent fees and legal costs on sale
- Capital improvements (not repairs or maintenance)
- Indexation allowance (for properties owned before April 1998)
A landlord selling a £400,000 property bought for £250,000 with £20,000 improvements and £15,000 sale costs would have a gain of £115,000 before the annual exemption.
Key Reliefs and Exemptions
Principal Private Residence Relief
If you lived in the property as your main home at any point, you might qualify for partial principal private residence relief. The final 9 months of ownership always qualify for relief, regardless of whether you lived there.
Lettings Relief
Lettings relief was significantly restricted from April 2020. It now only applies if you shared occupancy with tenants, making it largely irrelevant for most BTL properties.
Business Asset Disposal Relief
This relief (formerly Entrepreneurs' Relief) typically doesn't apply to residential property investments. It's mainly relevant for commercial property used in a business.
Timing and Planning Strategies
The timing of your property sale can significantly impact your capital gains tax liability. Consider these factors:
Tax Year Planning
Spreading disposals across tax years can help utilise multiple annual exemptions. However, with only £3,000 available each year, this strategy has limited impact for high-value properties.
Income Management
If possible, time sales for years when your other income is lower. This might keep you in the basic rate band, reducing CGT from 24% to 18%.
Loss Harvesting
Capital losses can offset gains in the same tax year or be carried forward indefinitely. Consider realising losses on underperforming properties to reduce overall CGT liability.
Spousal Transfers
Transfers between spouses are generally tax-free. This can help utilise both partners' annual exemptions or take advantage of different tax rates.
Professional Advice
Given the complexity and potential costs involved, consider seeking specialist advice. Our services include CGT planning and compliance support for property investors. The interaction between various reliefs, timing considerations, and structural options means professional guidance often saves more than it costs.
Company vs Personal Ownership
Properties held in companies face corporation tax on chargeable gains, not CGT. For 2026/27, corporation tax rates are:
- 19% on profits up to £50,000
- 25% on profits over £250,000
- Marginal rate between £50,000-£250,000
This can provide significant savings compared to higher rate CGT. However, incorporation brings other considerations including stamp duty costs and ongoing compliance requirements.
Reporting, Payment and Record Keeping
Capital gains tax on property sale UK 2026 must be reported within strict deadlines:
- 60 days from completion to report the disposal
- 31 January following the tax year for any additional tax due
You must make a payment on account within 60 days, even if you expect a refund after claiming reliefs or losses.
Maintain detailed records of all property-related costs and improvements. HMRC can enquire into disposals for up to four years after the filing deadline, or longer if they suspect deliberate errors. Key documents include:
- Original purchase documentation
- Receipts for all improvements and capital expenditure
- Estate agent and legal fees
- Evidence of any periods of personal occupation
Do you pay 18% or 24% on your gain?
On a gain of any size, usually both. The two rates are not a label attached to you as a taxpayer, they are slices of a single gain, and where the cut falls depends on how much of your basic rate band your income has already used up.
Work out capital gains on residential property in this order: take the gain, deduct any reliefs and losses, deduct the £3,000 annual exempt amount, then stack what is left on top of your taxable income for the year. Income fills the band first and the gain sits on top of it, so the part of the gain below £50,270 of combined income and gain is charged at 18% and the rest at 24%. If your income alone already runs past £50,270, there is no 18% slice left to use and the whole gain is charged at 24%.
Trustees and personal representatives get no 18% slice at all. They pay 24% on the whole gain, and a trust's annual exempt amount is £1,500 rather than £3,000. If you want the band-splitting arithmetic worked through in more detail, our CGT rates on property page runs five examples.
Have capital gains tax rates gone up?
CGT rates last changed on 30 October 2024, and whether that counted as an increase depends entirely on what you are selling.
Sell residential property and your rates came down. The CGT higher rate on residential gains was 28% before that date and is 24% now. The basic rate stayed at 18% throughout. A higher rate taxpayer selling a rental flat today pays four percentage points less on the gain than the same disposal would have cost in early 2024.
Sell commercial property or land and your rates went up. Non-residential gains were charged at 10% and 20% before 30 October 2024, and they now use the same 18% and 24% scale as residential property. Business Asset Disposal Relief has risen twice on its own track: 10% up to 5 April 2025, 14% for 2025/26, and 18% from 6 April 2026.
The bigger squeeze on landlords has not been the rate at all. It has been the annual exempt amount. Take a £60,000 gain. In 2022/23 you sheltered £12,300 and paid 28% on the rest, which came to £13,356. Today you shelter £3,000 and pay 24% on the rest, which comes to £13,680. The rate cut looks generous and the allowance cut quietly took back more than the rate cut gave.
What were the capital gains tax rates in 2024/25 and 2025/26?
2024/25 is the awkward year, because the rates changed part-way through it. Disposals landing on or before 29 October 2024 used the old rates and disposals from 30 October 2024 onwards used the current ones. Every year since has run on a single set of rates.
| Tax year | Residential property (basic / higher) | Non-residential and land (basic / higher) | Annual exempt amount |
|---|---|---|---|
| 2023/24 | 18% / 28% | 10% / 20% | £6,000 |
| 2024/25, to 29 October 2024 | 18% / 28% | 10% / 20% | £3,000 |
| 2024/25, from 30 October 2024 | 18% / 24% | 18% / 24% | £3,000 |
| 2025/26 | 18% / 24% | 18% / 24% | £3,000 |
| 2026/27 | 18% / 24% | 18% / 24% | £3,000 |
CGT on residential property in 2025/26 and 2026/27 is identical: 18% and 24%, with a £3,000 annual exempt amount in both. The 2025/26 and 2026/27 positions are the same, so an older calculation built on 2025/26 rates still holds.
One thing to check before you reuse an older calculation. Watch the annual exempt amount as closely as the rate, because the £3,000 figure has applied since 6 April 2024. Any 2024/25 or later computation still deducting £6,000 or £12,300 is overstating your relief and understating the tax, and the 60-day payment that follows will be short.
What is the CGT rate on commercial property and land?
The same 18% and 24%. Since 30 October 2024 there has been no separate rate for commercial property, bare land or any other non-residential asset held personally, so a shop, a warehouse, a development plot and a rental house all sit on one scale. Personal capital gain rates for the sale of commercial land follow your income position, not the type of asset.
The reliefs are where the two still part company. Rollover relief attaches to land and buildings you use in your own trade, so a trader replacing premises can roll the gain into the replacement rather than pay it now. Business Asset Disposal Relief does not attach to a building at all: it needs a disposal of the business itself, or of business assets after you stop trading, or an associated disposal alongside your exit from a partnership or company, so selling one shop while you carry on trading from the others gets you nothing. Neither relief reaches residential investment property. Capital allowances claimed on plant and machinery inside a commercial building also have to be unwound properly before you settle the gain. Our page on commercial versus residential property CGT sets out where the mechanics diverge.
Do non-residents pay capital gains tax on UK property?
Yes. If you live abroad and sell UK property, you pay UK capital gains tax on the gain at the same 18% and 24% rates a UK resident pays, and as an individual you keep the same £3,000 annual exempt amount. The charge is usually called non-resident capital gains tax, or NRCGT. Being taxed somewhere else on the same sale does not remove the UK charge; it is dealt with through a credit, if the relevant treaty gives you one.
You report every disposal, even when no tax is due
A UK resident only has to file the 60-day return where CGT is actually payable. As a non-resident you file a non-resident CGT return within 60 days of every UK land disposal, whether the answer is a large bill, a loss or nothing at all. That covers residential property, commercial property and land, and indirect disposals of shares in UK property-rich companies. Miss it and the penalty starts at £100 even where the tax due was zero.
Your base cost is usually rebased, not what you paid
Non-residents were brought into the UK CGT net in stages: residential property from 6 April 2015, then commercial property, land and indirect disposals from 6 April 2019. The default is that you only pay on growth since those dates, so a residential property you bought in 2004 is normally measured from its market value on 5 April 2015 rather than the price you paid. You can elect out of that if the facts suit you better, either by apportioning the whole gain in a straight line over your ownership or by using your actual original cost.
Timing a move matters as much as timing a sale, though moving abroad to sell saves less than people expect. A residential gain from April 2015 onwards is already inside the non-resident charge in full, so there is no UK tax to escape by leaving. The temporary non-residence rules then catch what is left over: where you were UK resident in at least four of the seven tax years before you went and you come back within five years, gains the non-resident charge did not reach, principally pre-April-2015 value and assets outside the UK, are taxed in the year you return. The detail sits in our guides to non-resident CGT rates and reporting, selling UK property from overseas and the five-year temporary non-residence rule.