If you sold a residential property in the UK after 30 October 2024 and made a gain, you are looking at capital gains tax (CGT) rates of 18% for basic rate taxpayers and 24% for higher rate taxpayers. These rates apply to disposals of UK residential property, including second homes, buy-to-let properties, and inherited properties that are not your main home.

This is a change from the old rates of 18% and 28% that applied before 30 October 2024. The government cut the higher rate from 28% to 24% in the Autumn Budget 2024. The basic rate stayed at 18%. These rates apply for the 2024/25 tax year (from 30 October 2024 to 5 April 2025) and continue into 2025/26 unless further changes are announced.

This guide covers the current UK residential property capital gains tax rates 2025 2026 18% 24%, who pays what, how the 60-day reporting rule works, and what the Business Asset Disposal Relief (BADR) changes mean for property investors.

Who Pays CGT on Residential Property?

You pay CGT on the gain you make when you sell or dispose of 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 residential property to someone else (not your spouse or civil partner)
  • Selling a property you used to live in but later let out (periods of non-occupation)

Your main home is usually exempt from CGT under Private Residence Relief. If you lived in the property as your only or main home for the entire period you owned it, you likely owe no tax. But if you let it out, used it for business, or had periods where it was not your main home, part of the gain may be taxable.

The Current Rates: 18% and 24%

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

  • 18% for gains that fall within your basic rate band (the portion of your total income and gains up to £50,270)
  • 24% for gains that fall within your higher rate band (the portion above £50,270)

These rates apply to residential property only. Other assets (shares, business assets, commercial property) have separate CGT rates of 10% and 20% (or 14% and 24% from April 2025 for business assets under BADR changes).

Worked Example: Basic Rate Taxpayer

Sarah is a sole trader with a taxable income of £30,000 in 2025/26. She sells a buy-to-let flat in Manchester's Northern Quarter and makes a gain of £40,000 after deducting the annual exempt amount of £3,000.

Her total income plus gains is £30,000 + £40,000 = £70,000. The basic rate band is £50,270. So £20,270 of her gain is taxed at 18% (£3,648.60). The remaining £19,730 of her gain is taxed at 24% (£4,735.20). Total CGT bill: £8,383.80.

Worked Example: Higher Rate Taxpayer

James is a company director earning £85,000 per year. He sells a second home in the Lake District and makes a gain of £60,000 after the annual exemption.

His income alone puts him in the higher rate band. All £60,000 of his gain is taxed at 24%. Total CGT bill: £14,400.

The Annual Exempt Amount

Every individual has an annual CGT exempt amount. For 2025/26, the annual exempt amount is £3,000. This means the first £3,000 of your total chargeable gains in the tax year are tax-free. If your gains are below £3,000, you do not need to report them or pay any CGT.

The exempt amount applies across all your gains, not per property. If you sell two properties in one tax year, you get one £3,000 allowance to split between them.

The 60-Day Reporting Rule

This is the one that catches people out. When you sell a UK residential property, you must report the gain to HMRC and pay the tax within 60 days of the completion date. Not the exchange date. Completion.

You do this using the 60-day CGT property return on the HMRC website. You do not wait until your self assessment tax return. The 60-day return is a separate, immediate filing obligation. If you miss the deadline, you face late filing penalties starting at £100 and interest on the unpaid tax.

If you already file a self assessment return, you still need to file the 60-day return. You then also report the gain on your SA100 self assessment return and the SA103 self-employment pages (if relevant) or the property pages. The tax you paid via the 60-day return is credited against your self assessment bill.

How to Calculate the Gain for the 60-Day Return

You need to estimate your total income for the current tax year to work out which CGT rate applies. HMRC provides an online calculator that walks you through this. You enter your estimated income, the sale proceeds, the purchase price, and your allowable costs (estate agent fees, solicitor fees, Stamp Duty Land Tax, capital improvements).

If you get the estimate wrong because your actual income turns out higher or lower, you adjust it on your self assessment return. There is no penalty for a reasonable estimate, provided you file the 60-day return on time.

Allowable Costs That Reduce Your Gain

You deduct these costs from your sale proceeds to arrive at your chargeable gain:

  • Purchase price of the property
  • Stamp Duty Land Tax paid on purchase
  • Estate agent fees (both buying and selling)
  • Solicitor and conveyancing fees (both buying and selling)
  • Cost of capital improvements (new kitchen, extension, new roof, rewiring) not routine repairs
  • Valuation fees for probate or CGT purposes

Routine maintenance and repairs (painting, fixing a leak, replacing a broken window) are not allowable. Those are revenue expenses, not capital improvements.

Private Residence Relief and Letting Relief

If you lived in the property at some point, you may qualify for Private Residence Relief. This exempts the gain for the period you lived there plus the final 9 months of ownership (even if you moved out earlier).

If you let the property out while you lived elsewhere, you may also qualify for Letting Relief. This relief is now restricted to periods where you shared occupation with a tenant (lodger arrangements). The old letting relief that applied to all periods of letting was abolished from April 2020.

The calculation gets complicated quickly. If you have a property you once lived in and later let out, speak to an accountant before you complete the sale.

Business Asset Disposal Relief (BADR) and Property

BADR (formerly Entrepreneurs' Relief) gives a lower CGT rate on qualifying business assets. For residential property, BADR only applies if the property qualifies as a business asset. That typically means a property used in a trading business, such as a bed and breakfast, a guest house, or a furnished holiday let (FHL) that meets the qualifying conditions.

Standard buy-to-let properties do not qualify for BADR. Letting residential property is considered an investment activity, not a trading business, for CGT purposes.

The BADR rate changed from 10% to 14% from 6 April 2025, and will rise to 18% from 6 April 2026. The lifetime limit remains £1 million of qualifying gains. If you hold a qualifying FHL business, the timing of your disposal matters. Selling before 6 April 2025 locked in the 10% rate. Selling in 2025/26 means 14%. From April 2026, 18%.

We cover this in more detail on our exit and capital gains page.

What About Non-UK Residents?

Non-UK residents pay CGT on gains from UK residential property at the same rates: 18% and 24%. The 60-day reporting rule also applies. Non-residents must report and pay within 60 days of completion, even if they have no other UK tax obligations.

There are additional rules for non-residents, including the need to file a Non-Resident CGT return. The calculation is similar, but you may need to rebase the property's value to April 2015 (when the non-resident CGT rules started for residential property).

How the Rates Compare to Other Assets

Residential property CGT rates (18% and 24%) are higher than the main CGT rates for other assets (10% and 20%). The government deliberately taxes property gains more heavily to discourage speculative investment in housing.

For disposals of shares, business assets, and commercial property, the rates are:

  • 10% for basic rate taxpayers (18% from April 2025 if BADR applies)
  • 20% for higher rate taxpayers (24% from April 2025 if BADR applies)

These rates apply above the annual exempt amount of £3,000.

Planning Points for Property Investors

If you are holding a residential property with significant gains, consider these strategies:

Time your disposal across tax years. If you sell in early April rather than late March, you get an extra year's annual exempt amount. Selling two properties in separate tax years gives you two £3,000 allowances.

Use your spouse's allowance. If you own the property jointly with your spouse or civil partner, you each get your own annual exempt amount and your own basic rate band. Transferring ownership before sale (if there is no CGT due on the transfer between spouses) can save tax.

Consider capital improvements. If you are planning to sell, carry out any capital improvements before completion. Those costs reduce the gain. Keep receipts and invoices.

Check your main home status. If you have more than one property, you can elect which one is your main home for CGT purposes. The election must be made within two years of acquiring the second property. If you missed that window, the position is fixed by HMRC's rules on the facts.

Watch the 60-day deadline. This is the most common mistake. People complete the sale, then forget to file the return until January. The penalties add up. Set a reminder for day 55 and file early.

When to Get Professional Help

The UK residential property capital gains tax rates 2025 2026 18% 24% are straightforward in principle. The application is not always simple. If any of these apply to you, speak to an accountant before you complete:

  • You lived in the property at any point and are claiming Private Residence Relief
  • The property was inherited and you are unsure of the probate value
  • You have made capital improvements that need to be valued and documented
  • You are a non-UK resident selling a UK property
  • You own the property through a trust or company structure
  • You are selling at a loss and want to claim relief against other gains
  • You are considering a gift of the property to a family member

As ICAEW qualified accountants, we handle these calculations regularly. The cost of getting the CGT calculation wrong (penalties, interest, missed reliefs) far exceeds the cost of professional advice.

If your property sale is approaching or you have already completed and need to file the 60-day return, contact us. We can run the numbers, file the return, and make sure you only pay what you owe.