What Are the Current UK CGT Rates for Residential Property?
If you sell a residential property that is not your main home, you pay Capital Gains Tax on the profit. The rates for 2025/26 are clear cut.
Basic rate taxpayers (those with total taxable income under £50,270) pay 18% on residential property gains. Higher rate taxpayers (income over £50,270) pay 24%.
These rates apply to disposals of UK residential property made on or after 30 October 2024. Before that date, the higher rate was 28% and the basic rate was 18%. The government cut the higher rate to 24% in the Autumn 2024 Budget.
For the 2026/27 tax year starting 6 April 2026, these same rates apply. There is no scheduled change to residential property CGT rates for 2026. The 18% and 24% bands remain in place.
How Is Residential Property CGT Calculated?
The calculation is straightforward in principle. You take the sale price, deduct the purchase price, and subtract allowable costs. The result is your chargeable gain.
Allowable costs include:
- Stamp duty paid on purchase
- Legal fees for both purchase and sale
- Estate agent fees
- Costs of improvements that add value (not repairs or maintenance)
- Survey costs
Here is a worked example. A higher rate taxpayer in Manchester buys a buy-to-let flat in the Northern Quarter for £180,000 in 2018. They sell it in June 2025 for £310,000. The costs are:
- Purchase: £180,000
- Stamp duty: £3,600
- Legal fees on purchase: £1,200
- New kitchen (2022): £8,500
- Legal fees on sale: £1,400
- Estate agent: £4,200
Total allowable costs: £198,900. Sale price: £310,000. Chargeable gain: £111,100.
At 24%, the CGT bill is £26,664. At 18% (if the seller's income were below £50,270), it would be £19,998.
When Do You Pay CGT on Residential Property?
You pay CGT when you sell or give away a residential property that is not your main home. The most common scenarios are:
- Selling a buy-to-let property
- Selling a second home or holiday home
- Selling an inherited property that you never lived in as your main home
- Gifting a property to someone who is not your spouse or civil partner
If you sell your main home, you usually do not pay CGT. Private Residence Relief covers the gain for the period you lived there, plus the final 9 months of ownership regardless of whether you lived there.
There are exceptions. If you let out part of your main home, or if you used part exclusively for business, you may owe CGT on that portion. Lettings Relief can reduce the gain, but only if you lived in the property at the same time as the tenant.
The Annual Exemption 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 stays at £3,000 (the government confirmed no further reduction).
This means you can make £3,000 of chargeable gains in a tax year before you owe any CGT. If your gain is £3,000 or less, you do not need to report it or pay tax.
Trustees have an annual exempt amount of £1,500.
Married couples and civil partners each have their own £3,000 allowance. You can transfer assets between you without triggering CGT, which can help use both allowances before selling.
Reporting and Payment: The 60-Day Rule
When you sell a UK residential property, you must report the gain and pay the tax within 60 days of completion. This is a hard deadline.
You use the 60-day CGT property return on HMRC's online service. You report the gain and pay the estimated tax in one go. You then include the final figures on your Self Assessment tax return (SA100) for the year.
If you miss the 60-day window, HMRC charges interest on the late payment and may issue penalties. The penalty starts at £100 for a late return, rising to £10 or more per day for continued delay, plus a percentage of the tax due.
For property sold after 26 October 2021, the 60-day rule applies to UK residents. Non-UK residents have a 30-day window. For disposals before 27 October 2021, UK residents had until the Self Assessment deadline (31 January after the tax year).
Business Asset Disposal Relief and Property
Business Asset Disposal Relief (BADR) used to offer a 10% CGT rate on qualifying business assets, including some property. From 6 April 2025, the rate rose to 14%. From 6 April 2026, it rises to 18%.
BADR does not typically apply to residential property held as a simple buy-to-let investment. It applies to disposals of:
- Shares in a trading company (held for at least 2 years, you are an employee or officer)
- Assets used in your trading business (sold when you cease trading)
- Land and buildings used by a trading business you own
If you sell a residential property that was used in a trade (for example, a guest house you ran as a business), BADR may apply to the gain on that property. The lifetime limit is £1 million of gains.
For most landlords selling a standard buy-to-let, BADR is not available. You pay the standard residential property CGT rates of 18% or 24%.
What Changes Are Coming in 2026/27?
For residential property specifically, the rates stay the same: 18% basic rate, 24% higher rate. The annual exemption stays at £3,000.
The main change from 6 April 2026 is the BADR rate rising to 18%. If you qualify for BADR on a property disposal, you will pay 18% instead of the current 14% or the old 10%. That is still lower than the 24% higher rate for non-BADR gains.
There is no indication from HMRC or the Treasury that residential property CGT rates will change again in the near term. The Autumn 2024 Budget set these rates, and the government has not signalled further changes.
However, always check before selling. Budgets can change policy with little notice.
How to Reduce Your CGT Bill on Property
Several strategies can lower the tax you pay on a property gain.
Use your annual exemption. If you have a gain of £15,000 and a £3,000 exemption, you only pay tax on £12,000. Staggering disposals across tax years can multiply the benefit.
Transfer to your spouse. Transferring a share of the property to your spouse or civil partner before sale uses their annual exemption and may keep the gain in the basic rate band.
Claim allowable costs properly. Many sellers miss costs that reduce the gain. Keep records of every improvement, legal fee, and survey. Do not include general maintenance (that is a revenue expense, not capital).
Check Private Residence Relief. If you ever lived in the property as your main home, you may have partial relief. The final 9 months of ownership always qualify, even if you moved out earlier.
Consider incorporating. If you hold multiple rental properties, holding them through a limited company can change the tax treatment. Corporation tax on gains is 19% or 25% (depending on profit level), and you may extract proceeds as dividends rather than paying CGT personally. This is a significant decision with ongoing compliance costs. Speak to an ICAEW qualified accountant before restructuring.
What About Non-UK Residents Selling UK Property?
Non-UK residents pay CGT on UK residential property gains at the same rates: 18% basic rate, 24% higher rate. The reporting window is 30 days, not 60 days.
You must register with HMRC for Non-Resident Capital Gains Tax (NRCGT) before reporting the disposal. The process is separate from the UK resident system.
If you are a UK resident selling a property abroad, you may owe UK CGT on the gain. You can usually claim Foreign Tax Credit Relief for any tax paid in the other country, up to the UK tax due on that gain.
Practical Steps Before You Sell
- Get a valuation. Know the current market value and your likely gain before you commit to selling.
- Estimate your CGT. Use the calculation method above or speak to your accountant. Know what you will owe before completion.
- Set aside funds. The 60-day window means you pay the tax before you receive the sale proceeds in many cases. Have cash available.
- Check your annual exemption status. If you have already used your £3,000 allowance on other disposals this year, you cannot use it again.
- Talk to your accountant. If your situation is complex (mixed use, partial relief, multiple owners, trusts), get advice before exchange.
Our CGT calculator can give you a quick estimate of the tax due on a property sale. For a full review of your position, contact our team.
Final Thoughts
The UK CGT rates for residential property in 2026 are 18% and 24%, unchanged from 2025/26. The annual exemption remains £3,000. The 60-day reporting rule applies to every UK resident selling a residential property that is not their main home.
If you are planning to sell a buy-to-let or second home in the next 12 months, the tax treatment is stable. The main risk is missing the 60-day deadline or overlooking allowable costs that reduce your gain.
For property investors with larger portfolios, the decision to hold property personally or through a company is worth reviewing. The CGT rates are lower than they were before October 2024, but the overall tax position depends on your income, other gains, and long-term plans.
Our business advisory services include property tax planning for landlords, property developers, and business owners. We help you structure disposals to minimise tax within the rules.
If your turnover or property portfolio has grown significantly in the last year, it is worth a review. Book a call with our team to check your current CGT exposure and plan ahead.