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Capital gains tax on property: the UK against the United States
On the same second-home sale with a 100,000 gain and 80,000 of other income, the United Kingdom charges an estimated £23,280 and United States federal tax $15,000, which is 23.3% of the gain against 15.0%. State tax is extra and can close that gap entirely. The bigger difference is not the rate but the main-home relief: the UK apportions by time with no cap, the US caps at $250,000.
| UK rates | 18% then 24% |
| US federal long-term rates | 0, 15 or 20 per cent |
| UK annual allowance | £3,000 |
| US annual allowance | None |
| UK main-home relief | Apportioned by time, uncapped |
| US main-home relief | Capped at $250,000 single, $500,000 joint |
| UK reporting deadline | 60 days |
| US reporting deadline | Annual return |
What does the same sale cost under each system?
A second home that was never a main residence, bought for 300,000 and sold five years later, owned by one person with 80,000 of other income. The only thing changing down the table is the gain.
| Gain | UK estimated tax | UK effective rate | US federal estimated tax | US effective rate |
|---|---|---|---|---|
| £25,000 | £5,280 | 21.1% | $3,750 | 15.0% |
| £50,000 | £11,280 | 22.6% | $7,500 | 15.0% |
| £100,000 | £23,280 | 23.3% | $15,000 | 15.0% |
| £250,000 | £59,280 | 23.7% | $42,440 | 17.0% |
| £500,000 | £119,280 | 23.9% | $91,165 | 18.2% |
Local currency, not converted. US figures are federal only. 2026/27 UK rates and 2026 US rates. Estimates, not tax advice.
The United Kingdom is more expensive on every line here, and the reason is structural rather than punitive: the UK charges 18 or 24 per cent on the whole gain, while the US long-term rate for this taxpayer is 15 per cent. The UK gives an annual allowance the US does not, but £3,000 stops mattering quickly as the gain grows.
How much does your other income change it?
In both countries the gain stacks on top of income, but the step is far sharper in the United States, where crossing a threshold moves the whole long-term rate rather than just the part above it.
| Other income | UK on a 100,000 gain | US federal on a 100,000 gain |
|---|---|---|
| 30,000 | £22,818 | $12,083 |
| 60,000 | £23,280 | $15,000 |
| 120,000 | £23,280 | $15,760 |
| 250,000 | £23,280 | $18,800 |
Income shown as a bare number because it is that amount of local currency in each column, not a converted figure. UK income is taxable income after the personal allowance.
The Net Investment Income Tax is what produces the jump in the US column: an extra 3.8% once modified adjusted gross income passes $200,000 for a single filer. It is charged on the lesser of the net investment income or the excess over that threshold, so it phases in rather than applying to everything at once.
What if it was your main home?
Here the two systems stop being different in degree and become different in kind. Both protect a home, but they protect it in opposite ways.
The United Kingdom gives Private Residence Relief as a fraction: the gain multiplied by the months it was your only or main home, plus the final 9 months, divided by the months you owned it. Live there throughout and the whole gain is relieved, however large.
The United States gives the Section 121 exclusion as a cap: $250,000 of gain if you are single, $500,000 if married filing jointly, provided you owned and lived in the home for two of the last five years. Anything above the cap is taxed however long you lived there.
| Gain on a home lived in throughout | UK | US single | US married filing jointly |
|---|---|---|---|
| 100,000 | £0 | $0 | $0 |
| 250,000 | £0 | $0 | $0 |
| 400,000 | £0 | $23,640 | $0 |
| 700,000 | £0 | $80,040 | $28,305 |
Ten years of ownership, lived in for all of it, 80,000 of other income. Amounts are in local currency.
Read the last row. On a large gain on a long-held family home, the United Kingdom charges nothing and the United States charges on everything above the cap. That is the single biggest divergence between the two systems, and it is invisible on any page that only compares headline rates.
What about a rental property?
The United States adds a charge the United Kingdom has no equivalent of. Depreciation claimed while the property was let is recaptured on sale and taxed at up to 25% per cent, regardless of your ordinary rate.
| US rental sold at a 200,000 gain | Estimated federal tax |
|---|---|
| No depreciation claimed | $33,040 |
| $60,000 of depreciation claimed | $39,040 |
The gain is held at 200,000 in both rows so the table shows only the rate effect: 25% per cent on the recaptured $60,000 instead of 15% per cent. In practice claiming depreciation also lowers your basis and so raises the gain, which this calculator does not model. Treat the real cost as at least this much.
This catches people who assume depreciation was free money. It was a deferral. The United Kingdom has no depreciation on residential property to recapture, so the question does not arise.
What if you are connected to both countries?
Then neither column above is your answer, and this is the point to stop reading a calculator and speak to someone qualified in both systems.
The United States taxes its citizens and green card holders on worldwide gains wherever they live, so an American selling a house in London is potentially within both systems at once. The United Kingdom taxes non-residents on UK residential property whatever their residence, so the reverse also happens. The UK and US double taxation treaty decides which country charges and what credit the other gives, and the relief is not automatic: it has to be claimed, and the two tax years do not even align.
Compare all five countries side by side
Common questions
Is capital gains tax higher in the UK or the US?
On the worked case above, a 100,000 gain with 80,000 of other income, the UK charges an estimated £23,280 against $15,000 of US federal tax, so the UK is higher. Add state tax and the ranking can reverse: a high-tax state closes the gap, a state with no income tax does not.
Does the US have an annual capital gains allowance like the UK?
No. The UK gives £3,000 per person per year. The US gives no equivalent annual allowance and instead has a 0 per cent long-term rate band for lower incomes, plus the Section 121 exclusion on a main home.
Which country treats a main home more generously?
The United Kingdom, on a large gain. Private Residence Relief is apportioned by time and has no cap, so a home lived in throughout is fully relieved however much it grew. The US caps the exclusion at $250,000 single and $500,000 joint, and taxes anything above it.
What is depreciation recapture and does the UK have it?
It is a US charge of up to 25% per cent on the depreciation you claimed while letting a property, applied when you sell. The UK has no depreciation on residential property, so it has no recapture.
I am a US citizen selling a property in the UK. Which applies?
Potentially both. The United States taxes citizens and green card holders on worldwide gains, and the United Kingdom taxes disposals of UK residential property by non-residents. The double taxation treaty decides which country charges and what credit the other gives, but relief must be claimed and the tax years do not align. This needs an adviser qualified in both countries.
Do these figures include state tax?
No. Every US figure here is federal only. State capital gains tax ranges from nothing to a substantial additional charge, and that difference is larger than the gap between the two countries on several rows of the table above.