If you sell a residential property in the UK that is not your main home, you will pay Capital Gains Tax on the profit. The rates for 2025/26 and into 2026 are set. They are 18% for basic rate taxpayers and 24% for higher rate taxpayers. These rates apply to disposals of UK residential property made on or after 30 October 2024. They remain in place for the 2025/26 tax year and, at the time of writing, for 2026/27 unless the government changes them in a future Budget.

This article covers the current UK CGT rates on residential property 2026, how they interact with your other income, the 60-day reporting rule, and the reliefs that can reduce your bill. If you are selling a second home, a buy-to-let, or an inherited property, you need to know the numbers before you exchange contracts.

What Are the CGT Rates for Residential Property in 2026?

Two rates apply to gains on residential property. They are higher than the standard CGT rates on other assets (10% and 20%) because the government treats property gains differently.

  • 18% - applies where your total taxable income and gains, after deducting the annual exempt amount, fall within the basic rate band (£50,270 for 2025/26).
  • 24% - applies where your total taxable income and gains exceed the basic rate band.

These rates apply to disposals of UK residential property where the gain is chargeable. They do not apply to your main home if Principal Private Residence relief fully exempts it. They apply to second homes, buy-to-let properties, inherited properties you sell (unless you lived in them), and properties used partly for business.

A Worked Example: Basic Rate Taxpayer Selling a Buy-to-Let

You are a sole trader in Birmingham earning £35,000 per year from your business. You sell a buy-to-let flat in the Jewellery Quarter. The gain after costs of sale and improvement costs is £40,000.

Your total income is £35,000. Your personal allowance is £12,570. Your taxable income is £22,430. The basic rate band is £50,270. You have £27,840 of unused basic rate band (£50,270 minus £22,430).

You deduct the annual exempt amount of £3,000 from the gain. The chargeable gain is £37,000. The first £27,840 of that gain is taxed at 18%. The remaining £9,160 is taxed at 24%.

Your CGT bill is (£27,840 x 18%) + (£9,160 x 24%) = £5,011.20 + £2,198.40 = £7,209.60.

If you were a higher rate taxpayer earning £80,000, the full £37,000 gain would be taxed at 24%. Your bill would be £8,880.

How the Annual Exempt Amount Works for Property Gains

The annual exempt amount (AEA) for 2025/26 is £3,000. This is the same for all individuals regardless of the asset type. It is not ring-fenced for property. If you sell shares and a property in the same tax year, you use one AEA against the total gains.

You cannot carry forward unused AEA from a previous year. You lose it if you do not use it. If your gains are small, consider timing a sale to use the AEA in separate tax years.

If you are married or in a civil partnership, you each have your own AEA. You can transfer assets between you without triggering a CGT charge (the no gain/no loss rule). This lets you use both allowances before a sale to a third party. For example, if you own a buy-to-let in your sole name and your spouse has no gains that year, transfer 50% to them before selling. They get their own £3,000 AEA, doubling the relief.

The 60-Day Reporting and Payment Rule

This is the part that catches people out. For UK residential property disposals, you must report the gain and pay the tax within 60 calendar days of completion. Not exchange. Completion. The day the buyer pays and you hand over the keys.

You report using the 60-day CGT property return on your HMRC online account. You do not wait until the January self assessment deadline. If you miss the 60-day window, HMRC charges interest and may issue penalties.

You still need to include the gain on your annual self assessment return (SA100 or SA103 if you are self-employed). The tax you paid within 60 days is credited against your final liability. If you overpaid, you get a refund. If you underpaid, you pay the balance by 31 January after the tax year.

What If You Sell in the 2026/27 Tax Year?

The UK CGT rates on residential property 2026 are the same as 2025/26 unless a Budget changes them. The current rates (18% and 24%) have been in place since 30 October 2024. The annual exempt amount is £3,000 for 2025/26 and is expected to remain at that level for 2026/27, though HMRC confirms this each year in the Autumn Statement.

The 60-day rule applies to all UK residential property disposals regardless of the tax year. It does not change with the rates.

Principal Private Residence Relief: When You Pay Nothing

If the property you sell is your main home, you do not pay CGT on the gain. That is Principal Private Residence (PPR) relief. It is automatic if you have lived in the property as your only or main residence for the entire period of ownership.

PPR relief also covers the final 9 months of ownership regardless of where you live. This is useful if you move out before selling. You do not pay CGT on the gain for those 9 months.

If you have lived in the property for part of the ownership period and rented it out for another part, you get partial relief. The gain is apportioned between the periods you lived there (exempt) and the periods you did not (chargeable). Lettings relief may also apply if you rented out the property while living in it at the same time. Lettings relief is capped at £40,000 per owner.

Example: Selling a Former Main Home

You lived in a house in Leeds city centre for 5 years. You then moved to a new property and rented out the Leeds house for 3 years before selling it. Total ownership period: 8 years (96 months). The total gain is £60,000.

You get PPR relief for the 5 years you lived there (60 months) plus the final 9 months. Total exempt period: 69 months. The chargeable period is 27 months (96 minus 69). The chargeable gain is (£60,000 x 27/96) = £16,875.

You then deduct the annual exempt amount (£3,000) leaving a chargeable gain of £13,875. Taxed at 18% or 24% depending on your income band.

Other Reliefs That Reduce Your Property CGT Bill

Several reliefs can lower the gain before you apply the rates. You should check each one before completing your return.

Costs of Acquisition and Disposal

You deduct the cost of buying the property (stamp duty, legal fees, survey costs) and the cost of selling it (estate agent fees, legal fees, EPC costs) from the sale proceeds. Keep all receipts. HMRC may ask for them.

Improvement Costs

You can deduct capital improvements that add value to the property. Replacement of a kitchen, extension, new roof, rewiring. You cannot deduct repairs and maintenance (painting, fixing a leak). Those are revenue costs and are not allowable for CGT purposes.

Gift Hold-Over Relief

If you give the property to someone (not a spouse or civil partner), you can claim gift hold-over relief. The gain is deferred until the recipient sells it. This is useful if you are giving a property to a child. The relief must be claimed jointly within the time limit.

Business Asset Disposal Relief (BADR)

BADR does not apply to residential property unless it is used as a furnished holiday let (FHL) that meets the qualifying conditions. The property must be let commercially, available for letting for at least 210 days, and actually let for at least 105 days in the year. If it qualifies, the gain is taxed at 14% for 2025/26 (rising to 18% from 6 April 2026). The lifetime limit is £1 million. This is a specialist area. Speak to an ICAEW qualified accountant before relying on it.

What Happens If You Inherit a Property and Sell It?

When you inherit a property, you get it at its probate value. That is the market value at the date of death. You do not pay CGT on the inheritance itself (Inheritance Tax may apply, but that is a separate calculation).

If you sell the inherited property later, your gain is the sale proceeds minus the probate value minus your costs. The UK CGT rates on residential property 2026 apply to that gain. You have the 60-day reporting obligation if you sell within the UK.

If you move into the inherited property and make it your main home, PPR relief may apply for the period you live there. But the period before you moved in is not exempt. You will pay CGT on the proportion of the gain relating to that earlier period.

How to Report and Pay CGT on a Property Sale

The process is straightforward if you prepare properly.

  1. Calculate the gain. Sale proceeds minus costs of sale minus costs of acquisition minus improvement costs. Deduct the annual exempt amount.
  2. Work out which rate applies. Add the gain to your other income for the tax year. If the total is within the basic rate band, part of the gain is at 18%. Anything above is at 24%.
  3. Report within 60 days. Use the HMRC online service "Report and pay Capital Gains Tax on UK property". You need your Government Gateway ID.
  4. Pay the tax. You can pay by bank transfer (Faster Payments, CHAPS, Bacs), debit card, or corporate credit card. Personal credit cards are not accepted.
  5. Include the gain on your self assessment. You do this on the SA100 or SA103 pages. The tax you already paid is credited.

If you are unsure about the calculation, speak to an accountant before the 60-day deadline. HMRC charges interest from the date the payment was due, not from the date they send a reminder.

Common Mistakes on Property CGT Returns

We see the same errors repeatedly. Here are the ones to avoid.

  • Missing the 60-day deadline. This is the most common. People think they can wait until January. They cannot. Set a calendar reminder for 50 days after completion.
  • Forgetting to deduct costs. Estate agent fees, legal fees, stamp duty on purchase, improvement costs. Every receipt counts.
  • Overclaiming PPR relief. If you lived in the property for part of the ownership but rented it out for another part, you only get partial relief. HMRC checks the dates.
  • Not transferring to a spouse before sale. If your spouse has unused AEA and a lower income band, transferring 50% before sale saves tax. Do it before exchange, not after.
  • Ignoring the 60-day rule for inherited property. Even if you inherited the property, if you sell it within the UK, the 60-day rule applies. The probate value is your base cost, not the original purchase price.

What About Non-UK Residents Selling UK Property?

If you are a non-UK resident selling UK residential property, you pay CGT on the gain at the same rates (18% and 24%). You also have the 60-day reporting obligation. The rules are the same whether you live in the UK or abroad. The only difference is that you cannot use the UK personal allowance unless you are UK resident for the tax year. You still get the annual exempt amount if you are an individual (not a company).

Non-UK resident companies pay corporation tax on the gain at 25% (main rate) or 19% (small profits rate) depending on their UK property income.

When to Speak to an Accountant

You should get professional advice if any of the following apply to your situation.

  • The property was your main home for part of the ownership period but not all of it.
  • You have owned the property for more than 20 years and records of purchase costs are incomplete.
  • The property was used partly for business (e.g. a home office or a rental flat above a shop).
  • You are selling to a connected person (a family member or a company you control).
  • The gain is large enough to push you into the higher rate band for the first time.
  • You are considering using BADR for a furnished holiday let.

As ICAEW qualified accountants, we handle property CGT calculations regularly. The 60-day deadline means there is no room for delay. If you are selling, contact us before exchange, not after.

For more on related topics, see our exit and capital gains articles or our CGT calculators for a quick estimate.