Capital Gains Tax (CGT) rates on property disposals in the UK follow a different structure to other assets, with specific rates that have remained stable for several years. For the 2026/27 tax year, CGT rates property 2026 are set at 18% for basic rate taxpayers and 24% for higher rate taxpayers.

Understanding these rates is crucial for landlords and property investors planning disposals, as CGT can represent a significant cost when selling investment properties. The rates apply to your total taxable income, including the capital gain, which determines whether you fall into the basic or higher rate band.

Current CGT Rates for Property 2026/27

The 18% 24% CGT rate structure for property remains unchanged for 2026/27:

  • Basic rate taxpayers: 18% CGT on property gains
  • Higher rate taxpayers: 24% CGT on property gains
  • Additional rate taxpayers: 24% CGT on property gains

These property CGT rates apply to residential property disposals by individuals, including buy-to-let properties, second homes, and inherited properties. The rate you pay depends on your total taxable income for the year, including the capital gain itself.

For example, a landlord with £40,000 employment income selling a rental property with a £20,000 gain would pay CGT at 18% on £10,270 of the gain (up to the basic rate threshold of £50,270) and 24% on the remaining £9,730.

How Your Tax Band Affects CGT Rates

Your CGT rate is determined by adding the capital gain to your other taxable income for the year. The 2026/27 income tax bands are:

  • Personal allowance: £0 - £12,570 (0%)
  • Basic rate: £12,571 - £50,270 (20% on income, 18% on property gains)
  • Higher rate: £50,271 - £125,140 (40% on income, 24% on property gains)
  • Additional rate: £125,140+ (45% on income, 24% on property gains)

If your total income plus capital gains exceeds £50,270, you'll pay the higher 24% rate on the portion above this threshold. This "stacking" effect means gains are treated as the top slice of your income.

A property investor with £45,000 rental income disposing of a property with a £15,000 gain would pay 18% CGT on £5,270 (up to the £50,270 threshold) and 24% on the remaining £9,730.

Annual Exempt Amount for CGT 2026/27

Every individual has an annual CGT exempt amount of £3,000 for 2026/27. This means you can make capital gains up to this amount each tax year without paying any CGT.

The exempt amount is significantly lower than in previous years - it was £6,000 in 2023/24 and £12,300 in 2022/23. This reduction affects all taxpayers and means more gains are now subject to CGT.

Married couples and civil partners each have their own £3,000 exempt amount, so they can collectively realise £6,000 of gains tax-free each year. This can be valuable for joint property ownership planning.

CGT Surcharge Rates for Non-UK Residents

Non-UK resident individuals face different CGT rates on UK property disposals. From April 2019, a surcharge applies to non-residents:

  • Non-resident basic rate: 18% + surcharge = higher effective rate
  • Non-resident higher rate: 24% + surcharge = higher effective rate

Non-residents must also report and pay CGT within 60 days of completion, rather than waiting until the following 31 January. This creates additional compliance obligations and potential cash flow challenges.

The surcharge doesn't apply to UK residents temporarily abroad, but the residence rules can be complex. Anyone uncertain about their residence status should seek professional advice before a disposal.

Company CGT Rates vs Individual Rates

Property-owning companies face different CGT treatment entirely. Companies don't pay CGT - instead, they pay Corporation Tax on their capital gains at the same rate as their profits:

  • Small profits rate: 19% (profits up to £250,000)
  • Main rate: 25% (profits above £250,000)

For many higher rate taxpayers, holding property in a company can result in lower effective tax rates on disposal, especially when combined with the availability of Entrepreneurs' Relief on company share disposals in certain circumstances.

However, company ownership brings additional compliance costs and complexity around extracting proceeds, which should be weighed against the potential tax savings.

Calculating Your CGT Liability

CGT is calculated on your net capital gain after deducting:

  • The original purchase price
  • Acquisition costs (legal fees, stamp duty, surveys)
  • Enhancement expenditure (extensions, improvements)
  • Disposal costs (estate agent fees, legal fees)
  • Your annual exempt amount (£3,000)

For example, a landlord selling a buy-to-let property for £300,000 that cost £200,000 with £5,000 purchase costs, £15,000 improvements, and £8,000 sale costs would have a gain of £72,000 (£300,000 - £200,000 - £5,000 - £15,000 - £8,000). After the £3,000 exempt amount, the taxable gain is £69,000.

If this landlord has other income of £35,000, they would pay 18% CGT on £15,270 (up to the £50,270 threshold) and 24% on the remaining £53,730, resulting in total CGT of approximately £15,644.

Reliefs That Can Reduce CGT Rates

Several reliefs can reduce or eliminate CGT on property disposals:

Principal Private Residence Relief (PPR)

Principal Private Residence Relief eliminates CGT on your main home disposal. The relief can also apply to periods when a property was your main residence before becoming a rental property.

The final 9 months of ownership are always deemed occupation, and you may qualify for periods of deemed occupation during rental periods in certain circumstances.

Lettings Relief

Lettings Relief was significantly restricted from April 2020. It now only applies when you dispose of a property that has been both your main residence and let out at some point, and you're still living there when you sell.

The relief is limited to the lower of £40,000, the PPR relief given, or the chargeable gain attributable to the letting period.

Business Asset Disposal Relief

Formerly Entrepreneurs' Relief, this relief reduces CGT to 10% on qualifying business asset disposals up to a lifetime limit of £1 million. It rarely applies to straightforward buy-to-let property but may be relevant for furnished holiday lettings or property development businesses.

Planning Around CGT Rates

Several strategies can help manage CGT exposure:

Annual Exempt Amount Planning

With only £3,000 exempt amount annually, spreading disposals across tax years has limited benefit. However, married couples can transfer assets between them to utilise both exempt amounts.

Timing of Disposals

Consider your income in the disposal year. If you expect lower income in a future year, deferring the disposal might result in more of the gain being taxed at 18% rather than 24%.

From April 2027, property income will be taxed at different rates (22% basic, 42% higher, 47% additional), which may affect this planning for landlords with significant rental income.

Incorporation Timing

The interaction between individual CGT rates and company Corporation Tax rates makes timing important for incorporation decisions. Current company rates of 19%/25% compare favourably to individual rates of 18%/24%, but extraction of proceeds must be considered.

Record Keeping for CGT Calculations

Accurate record keeping is essential for CGT calculations. You should retain:

  • Purchase contracts and completion statements
  • All legal fees and stamp duty receipts
  • Receipts for improvements and enhancements
  • Estate agent and legal fees on disposal
  • Evidence of any periods of personal occupation

With Making Tax Digital requirements incoming for property landlords, digital record keeping is becoming increasingly important for all aspects of property taxation.

CGT Returns and Payment Deadlines

UK residents must report capital gains either through their Self Assessment tax return by 31 January following the tax year end, or through the real-time CGT service if they don't normally complete a tax return.

Payment is due by 31 January following the tax year end. For example, gains realised in 2026/27 must be reported and paid by 31 January 2028.

Non-UK residents face much tighter deadlines, with reporting and payment required within 60 days of completion. Missing these deadlines can result in penalties and interest charges.

For complex property portfolios or significant disposals, working with a specialist property accountant can ensure compliance and optimise the tax position through legitimate planning opportunities.