Capital Gains Tax on Property UK 2025 Guide
Everything you need to know about CGT rates 18% and 24%, the £3,000 annual exempt amount, reliefs, calculation methods, and the 60-day reporting rule for 2025/26.
Contents
CGT Rates on Residential Property 2025/26
Capital Gains Tax (CGT) on residential property in the 2025/26 tax year is charged at two rates depending on your total taxable income. These rates were set following the October 2024 Autumn Budget, which aligned the rates for property with other asset classes.
Note that where a gain straddles the basic rate band, you pay 18% on the portion within the band and 24% on the portion above it. Your income is considered first when calculating which band your gain falls into.
| Taxpayer Type | Income Level | CGT Rate on Property |
|---|---|---|
| Basic rate taxpayer | Up to £50,270 | 18% |
| Higher rate taxpayer | £50,271 to £125,140 | 24% |
| Additional rate taxpayer | Over £125,140 | 24% |
| Non-UK resident | Any | 24% (higher rate applies) |
Annual Exempt Amount: £3,000 for 2025/26
Every individual has a CGT annual exempt amount — the amount of gain you can make each tax year before any CGT becomes payable. For 2025/26, this is £3,000.
| Tax Year | Annual Exempt Amount | Change |
|---|---|---|
| 2022/23 | £12,300 | — |
| 2023/24 | £6,000 | -51% |
| 2024/25 | £3,000 | -50% |
| 2025/26 | £3,000 | Unchanged |
The annual exempt amount cannot be carried forward to future years if unused. Married couples and civil partners each have their own separate £3,000 allowance. This means a married couple can jointly make up to £6,000 of gains before any CGT is due, provided the assets are owned jointly or have been transferred between spouses before sale.
How to Calculate Your CGT
Calculating CGT on a property sale involves several steps. The basic formula is:
CGT Calculation Formula
Sale Price
− Purchase Price
− Allowable Costs (both purchase and sale)
− Improvement Costs
= Gross Gain
Gross Gain
− Private Residence Relief (if applicable)
− Letting Relief (if applicable)
− Annual Exempt Amount (£3,000)
= Taxable Gain
Taxable Gain × CGT Rate (18% or 24%)
= CGT Payable
Worked Example: Selling a Buy-to-Let Property
Example Calculation
Jane purchased a buy-to-let flat in 2015 for £200,000. She paid £1,500 in stamp duty and £1,200 in solicitor fees on purchase. She has spent £15,000 on a new kitchen (a qualifying improvement). She sells in 2025 for £310,000, paying £3,000 estate agent fees and £1,500 in solicitor fees. Jane is a higher rate taxpayer.
| Sale price | £310,000 |
| Less: Purchase price | £200,000 |
| Less: Stamp duty on purchase | £1,500 |
| Less: Solicitor fees (purchase) | £1,200 |
| Less: Improvement costs (kitchen) | £15,000 |
| Less: Estate agent fees (sale) | £3,000 |
| Less: Solicitor fees (sale) | £1,500 |
| Gross Gain | £87,800 |
| Less: Annual exempt amount | £3,000 |
| Taxable Gain | £84,800 |
| CGT at 24% (higher rate) | £20,352 |
Allowable Costs and Deductions
HMRC allows you to deduct certain costs from the sale price to reduce your taxable gain. It is important to keep records of all expenditure relating to your property.
Costs Allowed on Purchase
- Purchase price of the property
- Stamp Duty Land Tax (SDLT) paid on acquisition
- Solicitor and conveyancing fees
- Surveyor and valuation fees at purchase
- Estate agent fees paid to find the property (if applicable)
Costs Allowed on Sale
- Estate agent or auctioneer fees
- Solicitor and conveyancing fees on the sale
- Advertising costs
Improvement Costs
Capital improvements that enhance the value of the property are deductible. These are different from routine maintenance and repairs, which are not allowable. Examples of allowable improvements include:
- Building an extension or loft conversion
- Installing a new kitchen or bathroom (replacing like-for-like is debatable; a significant upgrade usually qualifies)
- Converting the property to a different use (e.g., adding a self-contained flat)
- Structural work such as underpinning
Private Residence Relief (PRR)
Private Residence Relief is the most valuable CGT relief available to homeowners. It exempts you from CGT on the gain from selling your main home — provided you have lived in it as your only or main residence throughout your entire period of ownership.
How PRR Is Calculated
If you have not lived in the property as your main home for the entire period, PRR is given proportionally:
PRR Proportion Formula
PRR = Total Gain × (Period of main residence occupation ÷ Total period of ownership)
Final period exemption: The last 9 months of ownership always qualify for PRR, even if you have moved out. This helps owners who have bought a new home before selling the old one.
Periods That Qualify for PRR Even Without Occupation
| Period of Absence | Duration | Condition |
|---|---|---|
| Working abroad (all roles) | Any length | Must occupy as main home before and after |
| Working in UK (away from home) | Up to 4 years | Must occupy as main home before and after |
| Any reason | Up to 3 years (cumulative) | Must occupy as main home before and after |
| Final period | Last 9 months | Property must have been main home at some point |
Letting Relief
Letting Relief can reduce your CGT when you have let out part of a property that also served as your main home. Since April 2020, the rules changed significantly and Letting Relief now only applies where you are in shared occupancy with your tenant — meaning you, as the owner, must have been living in the property at the same time as the tenant was renting a room or part of the property.
Letting Relief Cap
The maximum Letting Relief you can claim is the lowest of:
- The amount of Private Residence Relief you are entitled to on the property
- The amount of gain attributable to the let period
- £40,000
The 60-Day Reporting Rule
One of the most time-sensitive aspects of CGT on residential property is the 60-day reporting requirement. Since 27 October 2021, you must report and pay CGT on UK residential property within 60 days of the completion date.
How to Report Within 60 Days
- Log in to your HMRC online account (Government Gateway)
- Navigate to 'Report and Pay Capital Gains Tax on UK property'
- Complete the online return with details of the disposal
- Calculate the CGT due (an estimate is acceptable at this stage)
- Pay the CGT within 60 days of completion
Who Must Report Within 60 Days
| Scenario | 60-Day Report Required? |
|---|---|
| Sale of a buy-to-let property with a gain | Yes |
| Sale of a second home with a gain | Yes |
| Sale fully covered by PRR (zero tax due) | No |
| Sale results in a loss (no tax due) | No (but report via Self Assessment) |
| Non-UK resident selling any UK residential property | Yes, even if no gain |
Payment on Account
When you make your 60-day report, you pay a payment on account — an estimate of the CGT you owe based on your expected income for the year. This is because your final tax liability depends on your total income for the tax year, which may not be fully known at the point of sale.
At the end of the tax year, if you complete a Self Assessment tax return, you will reconcile the payment on account against your actual CGT liability. If you paid too much, HMRC will refund the difference. If you paid too little, you pay the balance by 31 January following the end of the tax year.
Stamp Duty Interaction with CGT
Stamp Duty Land Tax (SDLT) and Capital Gains Tax interact in an important way: the SDLT you paid when you purchased the property is an allowable cost that reduces your CGT gain.
| Purchase Price Band | Standard SDLT Rate | Second Home / Buy-to-Let Surcharge |
|---|---|---|
| Up to £125,000 | 0% | 3% |
| £125,001 to £250,000 | 2% | 5% |
| £250,001 to £925,000 | 5% | 8% |
| £925,001 to £1.5m | 10% | 13% |
| Over £1.5m | 12% | 15% |
For example, if you bought a second property for £400,000 and paid SDLT including the 3% surcharge, that full SDLT amount (for instance, around £22,000) is deductible when you later calculate your CGT gain on sale.
Frequently Asked Questions
For the 2025/26 tax year, CGT on residential property is charged at 18% for basic rate taxpayers and 24% for higher and additional rate taxpayers. These rates apply to buy-to-let properties, second homes, and any property that does not fully qualify for Private Residence Relief.
You pay CGT on the gain (sale price minus purchase price minus allowable costs) after deducting the £3,000 annual exempt amount. The remaining gain is taxed at 18% (basic rate) or 24% (higher rate). For example, a £50,000 gain minus £3,000 exemption = £47,000 taxable. At 24%, that equals £11,280 CGT.
Private Residence Relief (PRR) exempts you from CGT on the gain from your main home if you lived there throughout your ownership. Partial relief applies if you only lived there for part of the time. The final 9 months of ownership always qualify for PRR even if you have moved out.
Letting Relief reduces CGT when you have let part of your main home while also living there (shared occupancy). Since April 2020, you must be living in the property at the same time as the tenant. The maximum relief is the lowest of: your PRR amount, the gain from the let portion, or £40,000.
You must report and pay CGT on UK residential property within 60 days of the completion date using HMRC's 'Report and Pay Capital Gains Tax on UK property' online service. If you also submit a Self Assessment tax return, you must include the disposal there too, though the 60-day payment deadline still applies.
Yes. Allowable deductions include: purchase price, stamp duty paid on purchase, solicitor fees on purchase and sale, surveyor fees, estate agent fees on sale, and the cost of genuine capital improvements such as extensions or significant renovations. Routine repairs and mortgage interest cannot be deducted.
The annual CGT exempt amount for 2025/26 is £3,000. This means the first £3,000 of gains in the tax year are free from CGT. Married couples and civil partners each have a £3,000 allowance. The allowance has fallen significantly from £12,300 in 2022/23 and cannot be carried forward if unused.