The short answer
CGT on UK property for 2026/27: residential rates, the £3,000 exemption, Private Residence and lettings relief, and the 60-day report.
If you sell a property that is not your main home — a buy-to-let, second home or inherited house — you normally owe Capital Gains Tax on the profit. For 2026/27 the rates are 18% for gains within your remaining basic rate band and 24% above it, after deducting the £3,000 annual exempt amount. If a UK-resident seller has CGT to pay on a UK residential disposal, the property return and payment deadline is generally 60 days of completion; non-residents have broader reporting rules for UK property and land.
The gap between property and other assets has widened in recent years, so getting the reliefs and timing right matters more than ever. Calculate your exposure with the CGT Calculator before you exchange contracts, and check how the property interacts with your other gains across the same tax year.
18% and 24% on residential gains
60-day reporting deadline
PPR relief protects your main home
How Property Gains Are Taxed in 2026/27
Residential property and most individual share gains use the 2026/27 CGT rates of 18% and 24%. Your income tax band decides which rate applies: add the gain to your taxable income, and the portion within the £37,700 basic-rate band is taxed at 18%, with the excess at 24%.
| Item | 2026/27 |
|---|---|
| Annual exempt amount (individual) | £3,000 |
| Residential rate — basic-rate slice | 18% |
| Residential rate — higher/additional slice | 24% |
| Main home (PPR relief) | Exempt |
| Reporting window for UK residential sales | Generally 60 days where the property rules require a return |
The gain is sale proceeds minus the original purchase price, minus allowable buying and selling costs, and minus qualifying capital improvement costs. HMRC treats repairs and improvements as a question of fact: an extension is normally a capital improvement, while ordinary maintenance and redecorating are not. Keep invoices and records for significant work. For a higher-rate taxpayer, every £10,000 of qualifying cost can reduce CGT by up to £2,400, subject to the actual rate and gain.
Reliefs That Reduce the Bill
- Principal Private Residence relief exempts your main home for the period you lived there plus the final 9 months of ownership, even if it was let out in between. If the property was your home for part of the ownership, the gain is apportioned by time.
- Lettings relief is now restricted to lodger-style shared occupancy: it only applies where you lived in the property alongside the tenant. It is capped at £40,000 per person, and the relief cannot exceed the PPR-exempt gain.
- Spouse transfers are no-gain/no-loss, so moving a half-share to your partner lets a couple use two £3,000 exemptions before selling.
- Losses on one property offset gains on another in the same year and carry forward indefinitely.
Worked Examples
Example 1 — Buy-to-let sale. Priya bought a flat for £200,000 in 2018 and sells it in September 2026 for £520,000. Purchase costs were £5,000, selling costs £12,000, and a new kitchen cost £15,000.
| Step | Amount |
|---|---|
| Sale proceeds | £520,000 |
| Purchase price + purchase costs | −£205,000 |
| Selling costs + improvements | −£27,000 |
| Gain | £288,000 |
| Annual exempt amount | −£3,000 |
| Taxable gain | £285,000 |
Priya earns £60,000, so her whole gain sits above the basic rate band and is taxed at 24%: £285,000 × 24% = £68,400, due within 60 days of completion.
Example 2 — Former home. David lived in a house for 12 years, then let it for 4 years before selling. Total ownership 16 years, gain £160,000. Assuming no special absence rules apply, PPR relief covers the 12 years lived there plus the final 9 months — 12.75/16 of the gain, or £127,500, is exempt. The remaining £32,500 gain, less the £3,000 exemption, is £29,500. If David has enough unused basic-rate band, that slice would be taxed at 18% (£5,310); otherwise some or all could be taxed at 24%. Lettings relief does not apply because no tenant shared the home with him.
Overseas, Gifted and Inherited Property
If you are UK resident and sell an overseas property, the gain may still be subject to UK CGT at the applicable rates, but the UK residential-property 60-day service is for UK property; report the overseas gain through the applicable HMRC route. You may be able to claim Foreign Tax Credit Relief where the other country also taxes the gain, so keep the foreign tax assessment. For gifted property, the donor normally uses market value rather than the price received, and the recipient normally acquires it at market value on the gift date, subject to special rules such as spouse transfers and hold-over relief. Inherited property is different: you normally acquire it at the probate or Inheritance Tax value, so a quick sale at a similar price normally produces little or no gain.
How to Reduce Your CGT Bill
| Strategy | Saving |
|---|---|
| Spread sales across tax years | Two £3,000 exemptions instead of one |
| Transfer half to your spouse | Uses a second exemption and second rate band |
| Claim every allowable cost | £10,000 of improvements saves £2,400 at 24% |
| Claim PPR for former-home periods | Exempts the lived-in years plus the final 9 months |
| Use losses from other disposals | Offsets gains before the exemption applies |
Timing is the cheapest lever: a couple selling a jointly owned rental can each use their £3,000 exemption and their own basic-rate band, which can move thousands of pounds from 24% down to 18% — worth planning before contracts are exchanged.
What Counts as a Capital Improvement
HMRC distinguishes between improvements and repairs as a question of fact. An extension or loft conversion is normally capital; a replacement that simply restores the property may be a repair, while a substantial upgrade may be an improvement. A £20,000 qualifying extension on a property sold at a £100,000 gain reduces the taxable gain by a fifth, saving up to £4,800 at the 24% rate, while a non-qualifying repair bill changes nothing. Keep itemised invoices for every project and any planning permission, because HMRC can ask for proof years after the sale.
The 60-Day Reporting Rule
| Requirement | Detail |
|---|---|
| Trigger | Completion of a qualifying UK residential property disposal |
| Deadline | Report and pay within 60 days of completion |
| Method | HMRC property disposal service via Government Gateway |
| UK-resident seller with CGT due | Yes — report and pay within 60 days |
| UK-resident disposal fully covered by relief or below the allowance | Usually no UK property return solely for that reason |
| Non-UK resident disposal of UK property or land | Report within the applicable 60-day property deadline, even if no tax is due |
| Late reporting or payment | Applicable penalties and interest may arise |
For a UK-resident seller, the 60-day window applies to qualifying UK residential property disposals where CGT is due; it does not turn an overseas property sale into a UK-property return. Non-UK residents must report UK property and land disposals even where no tax is due. The property report is separate from any Self Assessment filing, and a seller who already files Self Assessment may also need to include the disposal there. Keep a copy of the calculation and supporting records.
Pre-sale evidence checklist
Before exchange, create a property file containing the completion statement, purchase contract, stamp duty evidence, legal and agent invoices, improvement invoices, planning documents, mortgage and ownership records, dates of occupation, letting agreements and any periods of absence. Mark which costs are acquisition or disposal costs, which are capital improvements and which are ordinary repairs. If two people own the property, calculate each person's share and record any transfer or change in beneficial ownership.
Check the completion date carefully because it drives the 60-day deadline and the tax year. A calculation made at exchange may need updating when the final consideration, retention, indemnity or incidental cost is known. If the property was inherited or gifted, keep the probate or market-value evidence and do not substitute a later estate-agent estimate without explanation. If a company, trust or partnership owns the property, stop using the individual calculation until the correct taxpayer and reporting route has been confirmed.
After the property return is submitted, retain the reference, payment confirmation and working papers. Include the disposal in the annual Self Assessment return where required and reconcile any difference between the provisional property calculation and the final annual computation. Relief, losses or a foreign tax credit may alter the final amount, but they do not justify missing a deadline that already applies.
Keep the calculation dated and explain every estimate used.
Store the final evidence with the tax return.
Sell a property and stay compliant
- 1Work out the gain: proceeds minus purchase price, costs and capital improvements.
- 2Claim PPR for any period it was your home, plus the final 9 months, and check lettings relief eligibility.
- 3Deduct the £3,000 annual exempt amount and any brought-forward losses.
- 4If the property rules require it, report the UK residential disposal through the HMRC property service within 60 days of completion.
- 5Pay any tax due by the applicable 60-day deadline and include the disposal in Self Assessment where required.
Reconcile the Property Return with the Annual Position
The 60-day calculation is often provisional because the completion statement, retention, legal costs or final consideration may not be complete on the day the return is prepared. Save the version submitted to HMRC, then keep a dated schedule for later changes. The annual Self Assessment return can contain the final disposal calculation, other gains and losses, the annual exempt amount and any relief or foreign-tax-credit adjustment that was not fully reflected in the property return.
Separate the taxpayer and ownership questions before doing the arithmetic. Joint owners need their own proceeds, costs, relief history and unused allowance; a transfer between spouses can change the later calculation. A company, trust, partnership or non-resident owner may follow a different route. Do not use an individual’s 60-day form or CGT calculator result as evidence for an entity without confirming the legal owner and reporting obligation.
If the property was a home, build a dated occupation and letting timeline. Record periods of absence, shared occupancy, exclusive business use, improvements and changes in ownership. A relief label is not enough: the history determines whether Private Residence Relief or restricted lettings relief applies. Keep the completion date prominent, because an otherwise accurate gain can still create penalties if the report or payment is late.
Frequently Asked Questions
Do I pay CGT on my main home when I sell it?
What are the CGT rates on property in 2026/27?
How long do I have to report a property sale to HMRC?
Can I avoid CGT by reinvesting the sale proceeds?
What costs can I deduct when selling a property?
Do I pay CGT if I inherit a property and sell it?
What happens if I gift a property to a family member?
Does renting out my former home remove all Private Residence Relief?
Can I deduct mortgage interest from a UK property capital gain?
Do I report an overseas property sale through the 60-day UK property service?
Run the numbers through the CGT Calculator and check the whole-property picture with the Landlord Tax Calculator. Pair this guide with Capital Gains Tax 2026/27 and Stamp Duty Land Tax 2026/27 for the full sale-and-purchase picture.
Official sources
Related Guides
Landlord Tax 2026/27 — Section 24 & Allowable Costs
Buy-to-let landlord tax for 2026/27: Section 24, mortgage-interest credit, allowable expenses, replacement furniture, SDLT and CGT.
Overseas Property Tax 2026/27 — Rental Income, NRCGT & the NRL Scheme
UK tax on overseas property in 2026/27: rental income, foreign tax credits, the Non-Resident Landlord Scheme and CGT on disposal.
First-Time Buyer Stamp Duty 2026/27 — SDLT Relief & Examples
First-time buyer SDLT relief in 2026/27: 0% on the first £300,000, 5% up to £500,000, eligibility rules and worked examples for England and Northern Ireland.
Review notes and assumptions
Reviewed
2026-09-19
Assumptions
- The CGT result depends on the property history, ownership, residence, allowable costs, reliefs, other gains, tax band and completion date.
- The guide is a planning overview and does not confirm a specific Private Residence Relief, lettings-relief or non-resident position.