UK CGT Rates for Residential Property in 2026: The Basics
If you sell a residential property that is not your main home, you will pay Capital Gains Tax on the profit. The UK CGT rates 2026 residential property rates are 18% for basic rate taxpayers and 24% for higher and additional rate taxpayers. These rates have been stable since 30 October 2024, when the government increased them from the previous 18% and 28% structure.
The 18% rate applies where your total taxable income and gains fall within the basic rate band (£50,270 for 2025/26). The 24% rate applies above that threshold. If you are a basic rate taxpayer but the gain pushes you into the higher rate band, you pay a blended rate: 18% on the portion within the basic rate band and 24% on the rest.
These rates apply to residential property only. Non-residential assets (shares, business assets, commercial property) use separate CGT rates of 18% (basic) and 24% (higher). The old 10% and 20% rates for non-residential assets ended on 30 October 2024.
Who Pays CGT on Residential Property in 2026?
You pay CGT on residential property when you sell or dispose of a property that is not your Principal Private Residence (PPR). Common scenarios include:
- Selling a buy-to-let property
- Selling a second home or holiday home
- Selling a property you inherited and never lived in
- Selling a property that was once your main home but was let out for part of your ownership period
- Gifting a property (treated as a disposal at market value)
Your main home is normally exempt from CGT under PPR relief. That relief covers the period you lived in the property plus the final 9 months of ownership (regardless of where you were living at the end). If you let out part of your main home, or used part exclusively for business, the relief may be restricted.
How CGT on Residential Property Is Calculated
The calculation works like this:
Gain = Disposal proceeds (or market value) minus acquisition cost minus allowable costs
Allowable costs include Stamp Duty Land Tax paid when you bought the property, legal fees for both purchase and sale, estate agent fees, and capital improvements (not repairs or maintenance).
You then deduct your Annual Exempt Amount (the tax-free allowance). For 2025/26, the annual exempt amount is £3,000. This is per individual, not per property. If you own the property jointly with a spouse or civil partner, you each get your own £3,000 allowance.
Here is a worked example. Sarah, a higher rate taxpayer, sells a buy-to-let flat in Manchester's Northern Quarter in July 2026. She bought it for £180,000 in 2018 and sells it for £260,000. Allowable costs total £8,500 (SDLT, legal fees, estate agent fees). Her gain is £71,500. After her £3,000 annual exemption, the taxable gain is £68,500. At 24%, she owes £16,440 in CGT.
If Sarah were a basic rate taxpayer with total income of £30,000, she would have £20,270 of unused basic rate band (£50,270 minus £30,000). The first £20,270 of her gain would be taxed at 18% (£3,648.60), and the remaining £48,230 at 24% (£11,575.20). Total CGT: £15,223.80.
Key Reliefs and Exemptions for 2026
Principal Private Residence Relief
This is the biggest relief for most property owners. If the property has been your main home at any point, you get relief for the period you lived there plus the final 9 months. If you lived in the property for part of your ownership and let it out for the rest, the gain is apportioned. The relief can be substantial.
Letting Relief
Letting relief was restricted from April 2020. It now only applies if you are in shared occupancy with a tenant (i.e., you live in the property and let out part of it). For most landlords letting an entire property to tenants, letting relief is no longer available.
Spouse and Civil Partner Transfers
Transfers between spouses or civil partners are on a no gain/no loss basis. This means you can transfer part or all of a property to your spouse without triggering a CGT charge. The spouse inherits your original acquisition cost. This is useful for utilising both annual exemptions or for moving a property into the lower-earning spouse's name to benefit from the 18% rate.
Gift Hold-Over Relief
If you gift a residential property (not your main home) to a person or trust, you can claim gift hold-over relief to defer the gain until the recipient sells. This is not automatic; you must claim it jointly with the recipient within the self assessment timeframe.
Reporting and Payment Deadlines
For UK residential property disposals completed on or after 6 April 2020, you must report the gain and pay the tax within 60 days of completion. This is a strict deadline. Miss it and HMRC charges interest and penalties.
You report using the 60-day CGT property return (form PPD for UK residents). This is a standalone return separate from your self assessment. You still need to include the gain on your SA100 self assessment return as well, but the 60-day payment means HMRC collects the tax earlier.
For non-UK residents selling UK residential property, the same 60-day rule applies. Non-residents also pay CGT on UK residential property gains regardless of when they bought the property.
Practical Steps for Property Owners in 2026
Keep good records from day one. Save purchase contracts, SDLT returns, legal bills, and receipts for capital improvements. Without records, you cannot claim allowable costs, and HMRC will assume the full disposal proceeds are gain.
Plan the timing of disposals. If you are close to retirement or have a low-income year, consider delaying a sale to benefit from the 18% rate on more of the gain. Conversely, if you are a higher rate taxpayer now but expect to be one for the foreseeable future, there is no advantage in waiting.
Use both annual exemptions. If you own a property jointly with your spouse or civil partner, you can each use your £3,000 annual exempt amount. That is £6,000 of tax-free gain between you. Transferring ownership before sale can achieve this, but do it well in advance of the sale to avoid HMRC challenging the arrangement.
Consider incorporation. If you are a serious property investor with multiple properties, holding them through a limited company may be more tax-efficient. Corporation tax on rental profits is 19% to 25%, and selling the company shares (rather than the properties) can attract BADR at 14% (rising to 18% from April 2026). However, incorporation triggers an immediate CGT charge on the property gains at that point. This is a complex area; our incorporation team can run the numbers for your situation.
Watch the 60-day deadline. Set a calendar reminder the day you exchange contracts. You need to estimate the gain, file the return, and pay the tax within 60 calendar days of completion. If you are unsure of the exact gain, estimate it. You can amend the figures later on your self assessment return.
How the 2026 Rates Compare to Previous Years
The current rates (18% and 24%) have been in place since 30 October 2024. Before that, residential property rates were 18% and 28%. The change removed the 10% gap between basic and higher rates for non-residential assets (which moved from 10%/20% to 18%/24% on the same date).
Business Asset Disposal Relief (BADR) rates are separate. BADR applies to gains on qualifying business assets (including shares in a trading company) up to £1 million. The BADR rate is 14% for disposals from 6 April 2025 and rises to 18% from 6 April 2026. BADR does not apply to residential property unless it qualifies as a business asset (e.g., a furnished holiday let that meets the trading criteria).
Common Questions Property Owners Ask
Do I pay CGT if I sell my main home? No, provided you have lived in it as your main home throughout your ownership. Principal Private Residence relief exempts the gain.
What if I lived in the property for some years then let it out? The gain is apportioned. You get PPR relief for the period you lived there plus the final 9 months. The let period is taxable, but you may qualify for the restricted letting relief if you shared occupancy with a tenant.
Can I avoid CGT by gifting the property to my children? Gifting is treated as a disposal at market value. You will still owe CGT on the gain. Your children inherit your base cost, so they pay CGT on the full gain when they sell. Gift hold-over relief can defer the gain, but it requires a joint claim and is not available for all property types.
What happens if I sell a property and buy another one immediately? There is no rollover relief for residential property (unlike business assets). You pay CGT on the gain in the year of sale, regardless of what you do with the proceeds.
When to Speak to an Accountant
CGT on residential property is straightforward for a single buy-to-let sale. It gets complicated when you have multiple properties, periods of main residence mixed with letting, capital improvements, or joint ownership with non-spouses. If any of those apply to you, run the numbers with a qualified accountant before you exchange contracts.
Our services include property CGT planning, 60-day return filing, and full self assessment preparation. We are ICAEW qualified and work with property owners across the UK, from landlords in Birmingham's Jewellery Quarter to developers in Bristol's Harbourside. Contact us if you need help with a specific disposal or want to review your property portfolio's tax position.
For a full breakdown of current CGT rates across all asset types, see our fundamentals page. Our calculators section also has a CGT calculator you can use to estimate your liability.