Key facts
- CGT on residential property is 18% (basic rate) or 24% (higher/additional rate) from 30 October 2024.
- You must report and pay CGT within 60 days of completion using HMRC’s online service.
- The Annual Exempt Amount for 2026/27 is £3,000 per individual.
- Allowable costs include purchase price, SDLT, solicitor fees, and improvement expenditure.
- If you have ever lived in the property, you may qualify for partial Private Residence Relief.
Overview
When you sell a rental property for more than you paid (including allowable costs), the profit is subject to Capital Gains Tax. Rental properties do not benefit from Private Residence Relief (unless you also lived there), so the full gain is typically taxable.[1]
CGT Rates on Residential Property (2026/27)
| Taxpayer Band | CGT Rate |
|---|---|
| Basic rate (income up to £37,700 above Personal Allowance) | 18% |
| Higher rate (income above £37,700) | 24% |
| Additional rate (income above £125,140) | 24% |
Your capital gain is added to your other income to determine which band it falls into. If the gain straddles the basic/higher rate boundary, part is taxed at 18% and the remainder at 24%.[3]
Calculating Your Gain
The basic calculation:
| Step | Description |
|---|---|
| 1 | Sale proceeds (or market value if gifted) |
| 2 | Less: allowable costs (see below) |
| 3 | Less: Annual Exempt Amount (£3,000 for 2026/27) |
| 4 | Less: any available losses |
| 5 | = Taxable gain |
Allowable costs
- Purchase price (or probate value if inherited)
- SDLT paid on purchase
- Solicitor and conveyancing fees (on both purchase and sale)
- Estate agent fees on sale
- Improvement expenditure (extensions, conversions, structural improvements)
- Survey costs at purchase
Repairs and maintenance costs are not allowable for CGT — they are deducted from rental income instead. See allowable landlord expenses.
Worked Example
| Item | Amount |
|---|---|
| Sale proceeds | £350,000 |
| Less: Purchase price | −£200,000 |
| Less: SDLT on purchase | −£7,500 |
| Less: Solicitor fees (buy & sell) | −£3,000 |
| Less: Estate agent fees | −£5,250 |
| Less: Kitchen extension (improvement) | −£25,000 |
| Total gain | £109,250 |
| Less: Annual Exempt Amount | −£3,000 |
| Taxable gain | £106,250 |
If the landlord is a higher-rate taxpayer, the CGT would be £106,250 × 24% = £25,500.
The 60-Day Reporting Requirement
You must report the disposal and pay the estimated CGT within 60 days of the completion date (not the exchange date). This is done through HMRC’s online “Report and pay Capital Gains Tax on UK property” service.[2]
You will also need to include the disposal on your Self Assessment return for the tax year. Any CGT already paid through the 60-day return is credited against your final liability.
Penalties for late reporting: If you miss the 60-day deadline, HMRC charges a £100 late filing penalty. Further penalties apply if the return is more than 3 months late. Interest is also charged on any CGT paid late.
Partial Private Residence Relief
If you lived in the property as your main home for part of the time you owned it, you may qualify for partial Private Residence Relief (PRR). The gain is split between periods of occupation (exempt) and periods of letting (taxable).[4]
Key points:
- The final 9 months of ownership are always treated as deemed occupation if the property was your main home at any point
- Lettings relief (up to £40,000) may also apply if you shared occupation with a tenant
- See our detailed guides to Private Residence Relief and Lettings Relief
Tip: Keep detailed records of when you lived in the property and when it was let. The dates determine how much PRR you can claim and can make a significant difference to your CGT bill.
Frequently Asked Questions
How much CGT will I pay when I sell my rental property?
It depends on your total taxable income. The gain is added to your other income for the year. Any amount falling within the basic-rate band is taxed at 18%, and any amount in the higher-rate band is taxed at 24%. You can deduct the £3,000 Annual Exempt Amount and any allowable costs first.
What is the 60-day reporting requirement?
When you sell UK residential property at a gain, you must report the disposal and pay the estimated CGT within 60 days of completion. You do this through HMRC’s online “Report and pay Capital Gains Tax on UK property” service. Late reporting attracts penalties.
Can I deduct the cost of improvements from my gain?
Yes. Enhancement expenditure (improvements) that is reflected in the state of the property at the time of sale is an allowable deduction. This includes extensions, conversions, and other capital improvements — but not repairs, which are deducted from rental income instead.
Do I qualify for Private Residence Relief on a rental property?
Only if you lived in the property as your main home for part of the ownership period. The gain is apportioned between periods of residence (exempt) and periods of letting (taxable). The final 9 months of ownership are always treated as deemed occupation if the property was your main home at some point.
Further Reading
- CGT When You Sell a Rental Property — in-depth CGT guide
- The 60-Day CGT Property Report — how to file
- SDLT on Buy-to-Let — stamp duty on purchase
- Allowable Landlord Expenses — repairs vs improvements
- Private Residence Relief — exempting your main home
Looking for simple tax software?
#GoFile is HMRC-recognised and trusted by 50,000+ UK businesses. Set up in minutes, file with confidence.
Get Started For FreeNo credit card required · Cancel anytime