Capital Gains Tax on Property UK

Capital Gains Tax Rates on Property 2025/26

When you sell a property that isn't your main home, you may need to pay Capital Gains Tax on any profit you make.

How to Calculate Capital Gains Tax on Property

Follow these steps to work out your CGT liability:

What Costs Can You Deduct?

Allowable costs reduce your taxable gain. Keep all receipts and documentation.

Buying Costs (Allowable)

• Stamp Duty Land Tax (SDLT) paid when purchasing
• Solicitor and conveyancing fees
• Survey and valuation fees
• Estate agent fees (if you paid any when buying)

Improvement Costs (Allowable)

• Extensions and conservatories
• Loft conversions
• New kitchen or bathroom installations (not replacements)
• Central heating installation
• Double glazing installation

Non-Allowable Costs

• General repairs and maintenance
• Decorating and painting
• Like-for-like replacements
• Insurance and utility bills
• Mortgage interest (already claimed against rental income)

Selling Costs (Allowable)

• Estate agent fees and commission
• Solicitor and conveyancing fees
• Marketing and advertising costs
• EPC certificate costs

CGT Property Examples

When You Don't Pay CGT on Property

Private Residence Relief (PRR)

You don't pay CGT when selling your main home if:

• It has been your only or main residence throughout ownership
• You haven't used it for business
• The grounds are less than 5,000 square metres (about 1.2 acres)
• You haven't let out any part of it (other than lodger relief)

Letting Relief

If you let out part of your home that qualifies for PRR, you may get additional letting relief. This is the lower of:

• The amount of PRR you received
• £40,000
• The gain attributable to the let period

Reporting and Paying CGT

What You'll Need to Report

• Completion date
• Sale price and purchase price
• All allowable costs with evidence
• Your share if jointly owned
• Any reliefs being claimed

Payment Deadlines

The 60-Day Reporting and Payment Rule Explained

Since 6 April 2020, UK residents who sell (or otherwise dispose of) residential property at a gain must report the disposal and pay an estimate of the CGT due within 60 days of the completion date. This rule applies even if you also file a Self Assessment tax return.

What Triggers the 60-Day Requirement

You must report within 60 days if:

• You sell a UK residential property at a gain (after deducting costs and the annual exempt amount)
• You gift a property to someone other than your spouse or civil partner
• You transfer a property into or out of a trust
• You receive compensation or insurance proceeds for a property

When You Do NOT Need to Report Within 60 Days

• The property is fully covered by Private Residence Relief (your main home throughout ownership)
• You make a loss on the sale (no CGT is due)
• The gain is within your annual exempt amount and you have no other chargeable gains to report
• The property is transferred to your spouse or civil partner

How to Report

Use HMRC's online service at gov.uk/report-and-pay-your-capital-gains-tax. You will need a Government Gateway account. The report requires details of the property, sale price, purchase price, allowable costs, and any reliefs being claimed. You pay an estimated CGT amount at the time of reporting. The final CGT position is reconciled when you file your Self Assessment return for the tax year.

Jointly Owned Property and CGT

When a property is owned jointly by two or more people, CGT is calculated separately for each owner based on their share of the property and their individual tax position.

Key Rules for Joint Ownership

• Joint tenants: Each owner is assumed to own an equal share. For two joint tenants, each owns 50% and reports half the gain.
• Tenants in common: Owners can hold unequal shares (e.g., 70/30). Each owner reports CGT on their specific share of the gain.
• Separate allowances: Each owner has their own £3,000 annual exempt amount, effectively doubling the tax-free gain for jointly owned property to £6,000.
• Individual tax rates: Each owner pays CGT at their own marginal rate (18% or 24%), so the total CGT bill depends on each person's overall income.

Worked Example: Jointly Owned Buy-to-Let

Total CGT for both partners: £15,540 on an £80,000 total gain. If the property were owned solely by Partner A, the CGT on £80,000 would be (£80,000 - £3,000) x 24% = £18,480 -- a difference of £2,940.

Capital Gains Tax on Inherited Property

When you inherit a property, you do not pay CGT at the point of inheritance. However, if you later sell the property for more than its probate value, CGT may be due on the gain.

How CGT Works on Inherited Property

• Base cost: The "purchase price" for CGT purposes is the probate value -- the market value of the property at the date of death, as agreed with HMRC for inheritance tax purposes
• Gain calculation: Sale price minus probate value minus allowable costs (solicitor fees, estate agent fees, improvements made since inheritance)
• No taper relief: Unlike inheritance tax (which has the 7-year rule for gifts), there is no taper relief for CGT based on how long you owned the inherited property

Worked Example: Selling an Inherited Property

Principal Private Residence Nominations

If you own more than one property and live in both at different times, you can nominate which property is your "main residence" for CGT purposes. This nomination determines which property qualifies for Private Residence Relief (PRR).

Key Rules for PPR Nominations

• Nomination deadline: You must nominate within 2 years of acquiring a second property. If you miss this deadline, HMRC will determine your main residence based on the facts (where you spend the most time, where you are registered to vote, your GP, etc.)
• You can change your nomination: There is no limit on how many times you can change your PPR nomination. Strategic changes can maximise relief across multiple properties
• Final 9 months: Any property that has been your main residence at any point during ownership automatically qualifies for PRR for the final 9 months of ownership, even if you have moved out
• Married couples: A married couple or civil partnership can only have one main residence between them. They must agree on the nomination

Ways to Reduce Capital Gains Tax

Legal Tax Planning Strategies

• Use both allowances: Transfer half to spouse before selling to use two £3,000 allowances
• Time your sale: Sell in a tax year where you're a basic rate taxpayer for 18% vs 24%
• Claim all costs: Keep records of all allowable improvements and fees
• Use losses: Offset capital losses from other assets against property gains
• Consider PRR: Live in the property as main residence before selling
• Holdover relief: Gift to family to defer CGT (they inherit your base cost)

CGT Worked Examples: Second Homes and Buy-to-Let

The following detailed examples illustrate how Capital Gains Tax is calculated in common real-world property sale scenarios for the 2025/26 tax year.

Example 1: Second Home Sold After 10 Years

Sarah purchased a holiday cottage in Cornwall in 2015 for £180,000 and sells it in 2025 for £320,000. She is a higher rate taxpayer.

Sarah must report and pay this within 60 days of completion using HMRC's online property disposal service.

Example 2: Buy-to-Let Owned Jointly by a Couple

James (higher rate taxpayer) and Emma (basic rate taxpayer) jointly own a buy-to-let flat purchased in 2018 for £250,000. They sell it in 2025 for £340,000 as tenants in common with equal 50/50 shares.

Total combined CGT: £14,490. If James had owned the property alone, the CGT would have been £72,000 - £15,000 costs - £3,000 allowance = £54,000 x 24% = £12,960. Joint ownership saved them money because Emma's lower rate applied to her share, and they used two annual exempt amounts instead of one.

Example 3: Former Main Home Let Out

David lived in a house for 5 years then let it out for 3 years before selling. Total ownership: 8 years. Gain (after costs): £120,000. He is a higher rate taxpayer.

Note on Letting Relief: Since 6 April 2020, Letting Relief only applies if you lived in the property at the same time as the tenant (e.g., letting out a room). David did not live there during the let period, so Letting Relief is £0.

Non-UK Residents and Property CGT

Non-UK residents are subject to Capital Gains Tax on UK residential property disposals. Since 6 April 2015, non-residents have been liable for CGT on gains arising from the disposal of UK residential property, and since 6 April 2019, this was extended to include non-residential UK property and land.

Key Rules for Non-Residents

• The gain is calculated from 5 April 2015 (or the date of acquisition if later) for residential property, using either a rebased market value at that date or time apportionment
• Non-residents must report and pay CGT within 60 days of completion, the same as UK residents
• The annual exempt amount of £3,000 is available to non-residents
• Non-residents pay CGT at the same rates as UK residents: 18% for basic rate and 24% for higher rate on residential property
• Non-resident landlords who have claimed UK rental income deductions should ensure they do not double-count costs deducted against both rental income and capital gains

Frequently Asked Questions

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