If you sell a residential property that is not your main home, you will pay capital gains tax on the profit. The rates changed on 30 October 2024 and are now fixed for 2025/26 and 2026/27. The uk capital gains tax rates residential property 2026 are 18% for basic rate taxpayers and 24% for higher rate taxpayers. These rates apply to the chargeable gain after deducting your annual exempt amount, which is £3,000 for 2025/26 and remains at £3,000 for 2026/27.

This article covers the current rates, how they apply to different taxpayers, the reporting rules, and the reliefs that still exist. Whether you are selling a buy-to-let property, a second home, or a property you inherited, the same rates apply. The only exception is your main residence, which qualifies for Private Residence Relief.

Current CGT Rates for Residential Property in 2026

The rates are straightforward. For disposals of residential property made on or after 30 October 2024, the rates are:

  • Basic rate taxpayers: 18% on gains within the basic rate band, then 24% on gains above it.
  • Higher rate taxpayers: 24% on all gains.
  • Additional rate taxpayers: 24% on all gains.

These rates apply to UK residential property. They do not apply to commercial property, shares, or other assets, which have separate CGT rates (10% and 20% for most assets, or 14% and 18% for Business Asset Disposal Relief from April 2025).

The old rates of 18% and 28% (which applied before 30 October 2024) are gone. The new rates are lower for higher rate taxpayers, who previously paid 28% and now pay 24%.

How the Basic Rate Band Works

If you are a basic rate taxpayer, your taxable income determines how much of your gain is taxed at 18% and how much at 24%. You add the chargeable gain to your total income for the year. If the combined total stays within the basic rate band (£50,270 for 2025/26 and 2026/27), the whole gain is taxed at 18%. If it pushes you into the higher rate band, only the portion within the basic rate band is taxed at 18%, and the rest at 24%.

Example: Sarah earns a salary of £35,000 in 2025/26. She sells a buy-to-let property making a chargeable gain of £40,000 after her annual exempt amount. Her total income and gains are £75,000. The first £15,270 of the gain (up to the £50,270 basic rate limit) is taxed at 18% (£2,748.60). The remaining £24,730 is taxed at 24% (£5,935.20). Total CGT: £8,683.80.

Example: James earns £55,000 in 2025/26. He sells a second home making a chargeable gain of £30,000 after the £3,000 allowance. His total income is already above the basic rate band, so the entire £30,000 is taxed at 24%. Total CGT: £7,200.

Annual Exempt Amount for 2025/26 and 2026/27

The annual exempt amount (AEA) for capital gains tax was cut significantly from April 2024. For 2025/26 and 2026/27, the AEA is £3,000 per individual. This is the same for both residential property and other assets, but you cannot use the same £3,000 allowance against multiple disposals in the same tax year.

If you are married or in a civil partnership and own a property jointly, each of you gets a £3,000 allowance. That means a couple selling a jointly owned property can shelter up to £6,000 of gains before tax applies.

The allowance is use-it-or-lose-it. If you do not use it in a tax year, it does not carry forward.

Reporting and Payment Deadlines

Residential property disposals have their own reporting and payment rules. You must report the gain and pay the tax within 60 days of the completion date. This applies even if you do not normally file a self assessment tax return.

You report the gain using the 60-day CGT property return on HMRC's online service. You must include the sale price, the purchase price, any allowable costs (legal fees, estate agent fees, Stamp Duty Land Tax), and the annual exempt amount. HMRC calculates the tax due and you pay it within the same 60-day window.

If you already file a self assessment return, you still need to do the 60-day return. You then also report the gain on your self assessment return (SA100 or SA108) for the relevant tax year. HMRC will reconcile the two payments.

Late filing penalties apply if you miss the 60-day deadline. The penalty is £100 for the first day late, then £10 per day for up to 90 days, then further penalties. Interest also accrues on unpaid tax.

Private Residence Relief: The Main Exception

If the property you sell is your main home, you do not pay CGT on the gain. This is called Private Residence Relief (PRR). The relief covers the entire period you lived in the property as your main residence, plus the final 9 months of ownership regardless of where you were living.

PRR does not apply to buy-to-let properties, second homes, or properties you never lived in. If you lived in the property for part of the ownership period, the gain is apportioned. Only the non-resident period is chargeable.

Example: Tom bought a flat in Manchester in 2018 for £180,000. He lived there until 2022, then rented it out. He sells it in 2026 for £280,000. The total gain is £100,000. He lived there for 4 years out of 8 years of ownership. PRR covers 50% of the gain (£50,000). The remaining £50,000 is chargeable. After his £3,000 AEA, the chargeable gain is £47,000, taxed at 24% (if he is a higher rate taxpayer). CGT: £11,280.

Other Reliefs That Still Apply

Several reliefs can reduce or defer CGT on residential property. They are worth knowing about if you are planning a sale.

Letting Relief

Letting Relief was restricted from April 2020. It now only applies if you lived in the property at the same time as your tenant (i.e., you rented out a room while living there). It does not apply to standard buy-to-let properties where the tenant occupies the whole property. The relief is capped at £40,000 per owner.

Gift Relief (Hold-Over Relief)

If you gift a residential property to a charity or into a trust, you can claim hold-over relief to defer the gain. This does not apply to gifts to individuals. If you gift a property to a relative, the gain is still chargeable, though you may be able to use the annual exempt amount.

Transfer Between Spouses

Transfers of property between spouses or civil partners are tax-free. The receiving spouse inherits the original cost basis. This can be useful for planning: if one spouse has unused basic rate band or annual exempt amount, you can transfer part ownership before a sale to reduce the overall tax bill.

Incorporation Relief

If you transfer a rental property business into a limited company, you can claim incorporation relief to defer the gain. This is complex and requires the transfer to be for shares in the company. It is not a full exemption, just a deferral. The gain crystallises when you sell the shares.

We cover these reliefs in more detail in our exit and capital gains blog.

How the 60-Day Reporting Works in Practice

The 60-day reporting requirement applies to all UK residential property disposals, including those that result in no gain or a loss. You must still submit a return even if no tax is due.

The calculation uses estimated figures for the tax year if your full year income is not yet known. HMRC provides an online calculator that works out the provisional tax. You pay that amount within the 60 days. When you file your self assessment return later, HMRC adjusts the final figure and either refunds overpaid tax or charges the balance.

Practical tip: Keep a record of all costs: purchase price, Stamp Duty Land Tax, legal fees on purchase and sale, estate agent fees, improvement costs (not repairs), and any capital allowances claimed. These reduce the chargeable gain.

If you are unsure about the calculation, we can help. Our services include CGT planning and reporting for property disposals.

Planning to Reduce Your CGT Bill

There are legitimate ways to reduce the CGT you pay on a property sale. These require planning before the sale, not after.

  • Use both spouses' allowances: If you are married, ensure the property is jointly owned so each of you can use the £3,000 AEA and potentially the basic rate band.
  • Time the sale across tax years: If you have two properties to sell, consider selling one in March and the other in April to use two years' worth of annual exempt amounts.
  • Claim all allowable costs: Improvement costs (extensions, new kitchens, new bathrooms) reduce the gain. Repairs and maintenance do not. Keep invoices.
  • Consider incorporation: If you hold multiple rental properties, transferring them into a limited company can defer CGT and may save income tax on rental profits. But weigh the ongoing costs (annual accounts, corporation tax returns, higher Stamp Duty on transfer).

We have a CGT calculator on our site that can help you estimate the tax on a property sale.

What About Non-Residents?

Non-UK residents who sell UK residential property are also subject to CGT. The rates are the same: 18% for basic rate taxpayers and 24% for higher rate taxpayers. Non-residents have the same £3,000 annual exempt amount. They must also file the 60-day return.

The rules for non-residents are broadly the same as for residents, but the calculation includes an apportionment of the gain based on the period of ownership after 5 April 2015 (when the rules were introduced). If you are a non-resident selling UK property, speak to an accountant familiar with cross-border tax.

Common Mistakes to Avoid

Property owners often make these errors when reporting CGT:

  • Missing the 60-day deadline: The most common mistake. HMRC sends penalty notices automatically. Set a calendar reminder for the day after completion.
  • Forgetting the annual exempt amount: The £3,000 allowance is easy to miss, especially if you are not used to filing CGT returns.
  • Not claiming all allowable costs: Estate agent fees, legal fees, and Stamp Duty Land Tax on purchase are all deductible. So are costs of establishing title (land registry fees, searches).
  • Confusing repairs with improvements: Repairs (fixing a leak, repainting) are not deductible. Improvements (adding an extension, installing central heating) are. Keep separate records.
  • Assuming PRR applies automatically: If you rented out a property you once lived in, PRR only covers the period you lived there plus the final 9 months. You must apportion the gain.

Final Thoughts

The uk capital gains tax rates residential property 2026 are clear: 18% for basic rate taxpayers, 24% for higher rate taxpayers, with a £3,000 annual exempt amount. The rates have been stable since October 2024 and are unlikely to change in the near term, though Budget announcements can always alter them.

If you are planning to sell a residential property that is not your main home, factor the CGT into your net proceeds. The 60-day reporting rule means you cannot defer the tax until your self assessment deadline. Plan ahead, keep good records, and consider using both spouses' allowances where possible.

For advice specific to your situation, speak to a qualified accountant. Our ICAEW qualified team at Holloway Davies can help you structure property disposals tax-efficiently. Contact us through our contact page for a consultation.