If you sell a UK property that is not your main home, you will almost certainly owe Capital Gains Tax (CGT) on the profit. The rates changed on 30 October 2024 and changed again for disposals after 5 April 2025 when Business Asset Disposal Relief (BADR) moved to 14%. Getting the calculation wrong or missing the 60-day reporting window for residential property can mean penalties and interest.

This article covers the CGT rates for the 2025/26 tax year, how to calculate your gain, which reliefs you can use, and exactly when you need to report and pay. It applies to UK residents selling UK property. Non-residents have separate rules, though the rates are the same.

What Counts as a Chargeable Property for CGT?

Not every property sale triggers CGT. Your main home is usually exempt under Private Residence Relief. But the following do count:

  • Buy-to-let residential properties
  • Second homes and holiday lets
  • Commercial property (shops, offices, warehouses, land)
  • Property you inherited and later sold (you inherit at market value, so the gain runs from that date)
  • Land sold without a building on it
  • A property you once lived in but later rented out (partial relief may apply)

If you sell your main home but used part of it exclusively for business, or if the garden exceeds 5,000 square metres (about half a hectare), part of the gain may be taxable.

CGT Rates on UK Property for 2025/26

From 30 October 2024, the government aligned residential and non-residential property rates. The rates for 2025/26 are:

  • Residential property: 18% for basic rate taxpayers, 24% for higher and additional rate taxpayers
  • Non-residential property (commercial, land): 18% for basic rate, 24% for higher rate
  • Business Asset Disposal Relief (BADR): 14% for disposals from 6 April 2025 (rising to 18% from 6 April 2026)

The rate you pay depends on your total taxable income and gains for the year. If your income plus gains push you into the higher rate band, you pay 24% on the portion above the basic rate threshold (£50,270 for 2025/26).

Example: A sole trader in Leeds sells a commercial unit. Her salary is £35,000. Her gain after reliefs is £40,000. Total taxable income and gains: £75,000. The first £15,270 of the gain falls within the basic rate band (taxed at 18%). The remaining £24,730 falls into the higher rate band (taxed at 24%).

How to Calculate Your Chargeable Gain

The calculation is straightforward but requires accurate records. Work through these steps:

Step 1: Find the disposal proceeds

This is the sale price. If you sold to a connected person (a family member or your own company), use market value instead. HMRC will challenge undervalue sales between connected parties.

Step 2: Deduct the allowable costs

These include the original purchase price, Stamp Duty Land Tax (SDLT) paid on purchase, legal fees on purchase and sale, estate agent fees, survey costs, and costs of improvements that add value (not repairs or maintenance).

Step 3: Deduct any reliefs

Private Residence Relief, Letting Relief (restricted to £40,000 and only where you also lived in the property), and rollover relief if you reinvest in another business asset.

Step 4: Deduct your annual exempt amount

For 2025/26, the CGT annual exempt amount is £3,000. This is per individual, not per property. If you and your spouse sell jointly, you each get £3,000.

Worked example: A couple in Bristol sells a buy-to-let flat. Purchase price in 2016: £185,000. Sale price in 2025: £310,000. SDLT and legal fees on purchase: £6,200. Estate agent and legal fees on sale: £7,800. Improvement costs (new kitchen and boiler): £14,000.

Gain before reliefs: £310,000 minus (£185,000 + £6,200 + £7,800 + £14,000) = £97,000. Each spouse owns 50%, so each has a gain of £48,500. Each deducts £3,000 annual exempt amount. Each taxable gain: £45,500. If both are basic rate taxpayers with no other gains, they pay 18% on the portion within the basic rate band. If one is a higher rate taxpayer, that spouse pays 24% on the full £45,500.

Reporting and Payment Deadlines for UK Property

This is where many property sellers slip up. For UK residential property, you must report the gain and pay the tax within 60 days of the completion date. This is a hard deadline. Miss it and you face penalties and interest on late payment.

You report using the 60-day CGT property return through your HMRC online account. You do not wait until your self assessment tax return. The 60-day return is a separate filing obligation.

For commercial property, you report the gain on your self assessment return (SA100 or SA103 for sole traders, partnership return for partnerships). The payment deadline is 31 January following the tax year of disposal. But if you also sold a residential property in the same year, the 60-day rule applies to that part of the gain.

If you are a non-UK resident selling UK property, you report and pay within 60 days for both residential and non-residential property.

Reliefs That Reduce Your CGT Bill

Private Residence Relief

If you lived in the property as your main home at any point, the final 9 months of ownership are always treated as deemed occupation. This means the gain for those 9 months is exempt. If you rented the property out after moving out, you may also qualify for Letting Relief (up to £40,000 per owner).

Business Asset Disposal Relief (BADR)

If you sell commercial property used in your business (a shop, office, or workshop owned personally but used by your trading company), you may qualify for BADR. The rate is 14% for 2025/26, rising to 18% from April 2026. You must have owned the asset for at least 2 years. The lifetime limit is £1 million of gains. Gains above £1 million are taxed at the standard 24% rate.

Rollover Relief

If you sell a business asset and reinvest the proceeds into another qualifying business asset within 3 years (or 1 year before the sale), you can defer the gain. This is common for farmers selling land and buying new land, or for tradespeople selling a workshop and buying a larger one.

Gift Hold-Over Relief

If you give a property to a family member or transfer it into a trust, you can claim hold-over relief. The gain is deferred until the recipient sells the property. This is useful for succession planning but requires a joint claim with the recipient.

What About Losses?

If you sell a property at a loss, you can offset that loss against other chargeable gains in the same tax year. If the losses exceed your gains, you carry the unused losses forward to offset against future gains. You must report the loss to HMRC within 4 years of the end of the tax year in which it occurred.

You cannot offset a capital loss against your general income. It only reduces capital gains.

How Spouses and Civil Partners Can Reduce CGT

Transfers between spouses or civil partners are tax-free. If one spouse has unused annual exempt amount or is a basic rate taxpayer while the other is a higher rate taxpayer, transferring ownership before sale can save tax. The transfer must be an outright gift of the beneficial interest, not just a paper exercise.

Example: A husband in Shoreditch owns a buy-to-let flat entirely in his name. He is a higher rate taxpayer. His wife has no income. He transfers 50% to her before sale. She uses her £3,000 annual exempt amount and pays 18% on her gain (assuming it stays within the basic rate band). The couple saves thousands in tax.

What If You Sell Through Your Limited Company?

If you own a property through a limited company, the company pays corporation tax on the gain, not CGT. The corporation tax rate is 19% or 25% depending on profit level. The company does not get an annual exempt amount. When you extract the profit as a dividend, you pay dividend tax on top. This structure rarely makes sense for a single buy-to-let property because of the double tax layer, but it can work for larger portfolios.

For most UK business owners selling personally held property, CGT at 18% or 24% is simpler and cheaper than the corporate route.

Practical Steps Before You Sell

  • Gather all purchase and improvement records. Without them, HMRC may estimate your cost base at zero.
  • Check whether you qualify for any relief. If you lived in the property at any point, Private Residence Relief may apply. If you used it for your business, BADR may apply.
  • Calculate your gain before you exchange contracts. This avoids a nasty surprise on completion day.
  • If you are selling a residential property, set a calendar reminder for 55 days after completion. You have 60 days to file and pay. Do not leave it to the last day.
  • Speak to an accountant before you sell. A few hours of advice can save thousands in tax. As ICAEW qualified accountants, we see clients who missed the 60-day deadline or failed to claim relief they were entitled to. Both are avoidable.

For more on how property gains interact with your overall tax position, see our Exit and Capital Gains articles. If you are considering selling a business property and reinvesting, our services page explains how we help with rollover relief claims.

Summary of Key Numbers for 2025/26

  • CGT annual exempt amount: £3,000
  • Residential property rates: 18% basic, 24% higher
  • Non-residential property rates: 18% basic, 24% higher
  • BADR rate: 14% (rising to 18% from April 2026)
  • BADR lifetime limit: £1 million
  • Residential property reporting deadline: 60 days from completion
  • Self assessment payment deadline for commercial property: 31 January after tax year end

If your turnover crossed the VAT threshold or you are considering a property sale, speak to us before exchanging contracts. The timing of the sale, your other income, and your reliefs all affect the final tax bill. Get the advice first.