If you sell a residential property in the UK that is not your main home, you will owe Capital Gains Tax (CGT) on the profit. The rates for 2025/26 and 2026/27 are unchanged from the rates introduced on 30 October 2024. For basic rate taxpayers, the rate is 18%. For higher and additional rate taxpayers, the rate is 24%.

These rates apply to disposals of UK residential property. They are different from the rates that apply to other assets like shares, business assets, or commercial property. The residential property rates are also separate from Business Asset Disposal Relief (BADR), which has its own rate of 14% for 2025/26 rising to 18% from April 2026.

This article covers the uk capital gains tax residential property rates 2026, how the rates interact with your income, the 60-day reporting requirement, and what happens if you sell a property that was once your main home.

What Are the Current CGT Residential Property Rates?

From 30 October 2024 onwards, the rates for residential property are:

  • 18% if your total taxable income and gains fall within the basic rate band (£12,571 to £50,270 for 2025/26)
  • 24% if your total taxable income and gains fall within the higher rate band (above £50,270)

These rates apply to disposals of UK residential property where the gain is not covered by Private Residence Relief (PRR). They also apply to second homes, buy-to-let properties, inherited properties you sell, and properties you developed or flipped.

The rates are the same for 2025/26 and 2026/27. The government has not announced any change to these rates for the 2026/27 tax year at the time of writing. That means the uk capital gains tax residential property rates 2026 are 18% and 24%, exactly as they stand now.

How the Rates Apply: A Worked Example

Let's say you are a basic rate taxpayer with employment income of £35,000 in 2025/26. You sell a buy-to-let flat in Manchester's Northern Quarter. The sale completes on 10 January 2026. Your gain after costs and the annual exempt amount is £15,000.

Your total income is £35,000. The basic rate band goes up to £50,270. That leaves £15,270 of unused basic rate band (£50,270 minus £35,000). Your gain of £15,000 fits entirely within that unused band. You pay CGT at 18% on the full £15,000. That is £2,700.

Now imagine the same scenario but your employment income is £48,000. Your unused basic rate band is only £2,270. The first £2,270 of your gain is taxed at 18% (£408.60). The remaining £12,730 is taxed at 24% (£3,055.20). Your total CGT bill is £3,463.80.

If your income is already above £50,270, the full gain is taxed at 24%. No basic rate band is available.

The Annual Exempt Amount for 2025/26 and 2026/27

Every individual has an annual CGT exempt amount. For 2025/26 it is £3,000. For 2026/27 it is also £3,000. The government reduced the allowance from £6,000 to £3,000 from April 2024 and has frozen it at that level.

You deduct the exempt amount from your total chargeable gains in the tax year before applying the rates. If you have multiple disposals, the exempt amount is applied against your total gains, not per property.

If your gains are below £3,000 in a tax year, you do not need to report them or pay CGT.

The 60-Day Reporting Window

When you sell a UK residential property, you must report the gain to HMRC and pay the tax within 60 calendar days of the completion date. This applies to UK residents. Non-UK residents have a 30-day window.

You report the gain using the 60-day CGT property return on the HMRC online service. You cannot file this return on paper. You must have a Government Gateway user ID and your Unique Taxpayer Reference (UTR).

The 60-day return is a provisional calculation. HMRC then reconciles the gain against your full Self Assessment return (SA100) at the end of the tax year. If your actual tax position differs from the provisional calculation, you may owe more tax or receive a refund.

As ICAEW qualified accountants, we see clients miss the 60-day deadline more often than they miss the Self Assessment deadline. The penalty for late filing of the 60-day return starts at £100 for the first day, then £10 per day up to 90 days, plus interest on late payment. It adds up fast.

Private Residence Relief and the Final 9 Months

If the property you sell is your main home, the gain is fully covered by Private Residence Relief (PRR). You pay no CGT. But if you let the property out at any point, or if you moved out and kept it as a second home, the relief is restricted.

PRR covers the period you lived in the property plus the final 9 months of ownership regardless of where you were living. This final 9 months rule applies even if you moved out years ago. It is a valuable relief that many property owners overlook.

If you rented the property out for a period, you may also qualify for Lettings Relief. Lettings Relief is capped at £40,000 per owner and applies only to periods where the property was your main home and was let out. It is not available for buy-to-let properties you never lived in.

How CGT Residential Property Rates Compare to Other Asset Rates

It helps to see the full picture. The CGT rates for 2025/26 are:

  • Residential property: 18% basic rate, 24% higher rate
  • Other assets (shares, commercial property, business assets): 10% basic rate, 20% higher rate
  • Business Asset Disposal Relief: 14% (rising to 18% from April 2026)

Residential property gains are taxed more heavily than gains on other assets. The government introduced the higher residential property rates in 2016 and increased them again in October 2024. If you hold a mix of asset types, the order of disposals can affect how much tax you pay because the basic rate band is shared across all gains.

What If You Sell a Property You Inherited?

Inherited property gets a base cost equal to the probate value at the date of death. If you sell it shortly after inheriting, the gain is usually small or nil. If you hold it for several years and sell later, the gain is the difference between the probate value and the sale price, less costs.

The same CGT residential property rates apply. The 60-day reporting window also applies. If you are the executor selling the property as part of the estate administration, different rules apply. Executors pay CGT at 24% on residential property gains and have a different annual exempt amount (£3,000 for 2025/26, shared across the estate).

Planning Around the Rates

If you are a higher rate taxpayer considering selling a residential property, there are a few practical strategies to consider:

  • Time the sale to a year when your income is lower. If you are between contracts, taking a sabbatical, or retiring, your income may drop into the basic rate band. That could reduce your CGT rate from 24% to 18% on some or all of the gain.
  • Use your spouse's or civil partner's allowance. Transfers between spouses are tax-free. If your spouse has unused basic rate band, transferring ownership before sale can reduce the overall tax bill. The transfer must be genuine and unconditional.
  • Offset capital losses. If you have losses from other disposals in the same tax year, you can offset them against your gains. Losses must be reported to HMRC within 4 years of the end of the tax year in which they arose.
  • Consider the annual exempt amount. If your gain is close to £3,000, you may be able to split the sale across two tax years by exchanging contracts in one year and completing in the next. This is a timing play and requires careful legal coordination.

What Happens If You Do Not Report a Property Sale?

HMRC receives data from the Land Registry and from conveyancers. They know when a property has changed hands. If you do not file the 60-day return, HMRC will write to you. The penalties escalate quickly.

For the 60-day return, the penalty is £100 for the first day late, then £10 per day for up to 90 days. After 12 months, a further penalty of 5% of the tax due or £300, whichever is higher, applies. Interest runs from the due date.

If you also fail to report the gain on your Self Assessment return, you face separate penalties for that failure. The total can be substantial.

How We Can Help

Our services include CGT planning and property disposal reporting. We handle the 60-day return, the Self Assessment reconciliation, and the interaction with PRR and Lettings Relief. If you are selling a residential property that is not your main home, talk to us before exchange of contracts. The tax planning opportunities are often time-sensitive.

If you are considering selling a buy-to-let, a second home, or an inherited property, we can model the tax outcome and help you decide on timing. Contact us through our contact page or call the office. We work with property owners across the UK, from a landlord in Leeds city centre to a portfolio owner in Edinburgh's Leith district.

For a broader overview of Capital Gains Tax, including rates for other assets and reliefs, see our exit and capital gains blog. You can also check our calculators page for a CGT estimator tool.

Summary

The uk capital gains tax residential property rates 2026 are 18% for basic rate taxpayers and 24% for higher rate taxpayers. These rates apply to disposals of UK residential property that are not your main home. The annual exempt amount is £3,000. The 60-day reporting window applies to every disposal.

If your income varies year to year, timing the sale to a lower income year can save you thousands. If you have a spouse or civil partner, transferring ownership before sale may reduce the rate. If you have capital losses, use them.

And if you are selling a property you once lived in, check whether Private Residence Relief covers some or all of the gain. The final 9 months rule alone can save a significant amount of tax.

Speak to an accountant before you exchange contracts. The planning window closes quickly once the sale is agreed.