United Kingdom
Capital Gains Tax on Property UK: Complete Guide to Selling and Tax
Capital gains tax applies when a UK property is sold at a profit and is not the seller's main home. The tax is 18% on gains within the basic-rate band and 24% above it, after a £3,000 annual exempt amount. On a £100,000 gain, a higher-rate taxpayer pays £23,280. The tax must be reported and paid within 60 days of completion.
| Annual exempt amount | £3,000 per person |
| Basic rate (residential property) | 18% |
| Higher rate (residential property) | 24% |
| Reporting deadline | 60 days from completion |
| Tax on £100,000 gain (higher-rate) | £23,280 |
| Tax on £100,000 gain (basic-rate, £30,000 salary) | £22,818 |
When does capital gains tax apply to a property sale?
CGT applies whenever a property is sold for more than it cost and the property is not covered by Private Residence Relief. The most common situations are selling a second home, a buy-to-let, an inherited property, or a holiday home.
The tax is charged on the gain, not the sale price. A house sold for £400,000 that was bought for £300,000 has a £100,000 gain. Only that gain is taxable, and only after deducting allowable costs and the annual exempt amount.
Selling at a loss produces no tax, but the loss can be reported and set against gains in the same year or carried forward to reduce tax in future years.
What is exempt from capital gains tax on property?
The main exemption is Private Residence Relief (PRR), which covers the gain on a property that was the seller's only or main home. If the property was a main residence for the entire ownership period, the gain is fully exempt and no CGT is due.
PRR also includes the final 9 months of ownership regardless of whether the seller lived there during that time. This protects sellers who move out before completion.
Partial PRR applies when a property was a main home for only part of the ownership. The exempt fraction is the months of occupation plus the final 9 months, divided by the total months of ownership.
| Step | Amount |
|---|---|
| Sale price | £500,000 |
| Less purchase price | −£300,000 |
| Total gain | £200,000 |
| Less Private Residence Relief (93 of 120 months) | −£155,000 |
| Chargeable gain | £45,000 |
| Less annual exempt amount | −£3,000 |
| Taxable gain | £42,000 |
| Estimated tax (higher-rate) | £10,080 |
Property owned 10 years, main home for 7. The final 9 months count as occupation.
Other exemptions are narrower. Transfers between spouses and civil partners are on a no-gain, no-loss basis. Gains below the £3,000 annual exempt amount are not charged.
How is capital gains tax on property calculated?
The calculation follows a fixed sequence: gain, minus costs, minus reliefs, minus the annual exempt amount, then taxed at the applicable rate.
The rates for residential property in 2026/27 are 18% on the portion of the gain within the unused basic-rate band and 24% on the rest. Income is counted first, so the gain is stacked on top of the seller's other income to determine which rate applies.
A higher-rate taxpayer (income above £50,270) pays the full 24% on the entire taxable gain. A basic-rate taxpayer with remaining basic-rate band capacity pays 18% on the portion that fits within that band.
What costs can be deducted?
Allowable costs reduce the gain pound for pound and are worth collecting before filing. Every legitimate cost claimed is money not taxed.
- Solicitor and conveyancing fees on the purchase and the sale.
- Estate agent fees on the sale.
- Stamp Duty Land Tax paid when buying.
- Survey and valuation fees connected to buying or selling.
- Capital improvements: extensions, loft conversions, new kitchens or bathrooms where none existed, anything that added lasting value.
| Step | Amount |
|---|---|
| Sale price | £400,000 |
| Less purchase price | −£250,000 |
| Less buying costs (stamp duty, solicitor) | −£8,000 |
| Less selling costs (agent, solicitor) | −£5,000 |
| Less improvements (extension) | −£20,000 |
| Net gain | £117,000 |
| Less annual exempt amount | −£3,000 |
| Taxable gain | £114,000 |
| Estimated tax (higher-rate) | £27,360 |
The effect of claiming £33,000 in allowable costs. Without them, the tax would be higher by the costs multiplied by the applicable rate.
Repairs and maintenance are not allowable. Replacing a boiler like for like, redecorating, or fixing a leaking roof maintains value rather than adding to it. Mortgage interest is also excluded, even on rental properties.
How is capital gains tax on property reported?
The gain must be reported and the tax paid within 60 days of completion. This is done through a dedicated HM Revenue and Customs Capital Gains Tax on UK property account, not through Self Assessment.
The 60-day deadline is separate from and earlier than the Self Assessment return for the same tax year. Missing it triggers a fixed penalty, with further penalties and interest accruing after that.
The gain must also be included on the annual Self Assessment return if the seller is required to file one. The tax already paid through the 60-day return is credited against the Self Assessment liability.
Does joint ownership reduce the tax?
Yes. Joint owners each get their own annual exempt amount and their own basic-rate band. This can produce a meaningful saving compared to single ownership.
On a £100,000 gain, a single higher-rate owner pays £23,280. The same gain split between two joint owners, both higher-rate, comes to £22,560. The saving comes from two allowances of £3,000 instead of one.
If one owner has lower income, the saving is larger again because more of their half of the gain falls within the basic-rate band at 18% rather than 24%.
How can the tax be reduced?
The main ways to reduce CGT on property are claiming all allowable costs, using joint ownership, and timing the sale to use annual allowances.
- Claim every allowable cost. Stamp duty, legal fees, agent fees, and capital improvements all reduce the gain directly.
- Use joint ownership. Two allowances and two basic-rate bands are worth real money.
- Time the sale. If completion falls near the end of a tax year, consider whether delaying to the next year would provide a fresh £3,000 allowance.
- Sell in a year of lower income. Retirement, a career break, or a gap between jobs can mean more of the gain falls in the basic-rate band.
- Set losses against gains. Capital losses from the same or earlier years reduce the taxable gain.
Work out your capital gains tax with the UK calculator
Common questions
Do I pay capital gains tax when I sell a property in the UK?
Only if the property is not your main home and the gain exceeds the £3,000 annual exempt amount. Sales of a main residence are usually exempt under Private Residence Relief.
How much capital gains tax do I pay on a property?
18% on the portion of the gain within the unused basic-rate band and 24% on the rest, after deducting the £3,000 annual exempt amount. On a £100,000 gain, a higher-rate taxpayer pays £23,280.
Is there an exemption for selling your own home?
Yes. Private Residence Relief exempts the gain on a property that was your only or main home for the entire period of ownership, plus the final 9 months.
What is the deadline for reporting capital gains tax on property?
60 days from the date of completion, through an HM Revenue and Customs Capital Gains Tax on UK property account.
Can I deduct stamp duty from my capital gain?
Yes. Stamp Duty Land Tax paid on the purchase is an allowable cost and reduces the gain pound for pound.
Does inheriting a property trigger capital gains tax?
Inheriting a property does not trigger CGT. But selling it later does, with the gain measured from the probate value at the date of death, not the original purchase price.
This is an estimate for general information only, not tax, legal or financial advice. Tax rules are complex and depend on your circumstances, and figures may not reflect the latest changes. Confirm your position with HM Revenue & Customs (gov.uk) or a qualified tax adviser before acting. The terms of use set out the limits of this estimate and of our liability.
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