United Kingdom
How to Calculate Capital Gains Tax on Property: Step-by-Step Guide
Capital gains tax on UK property is calculated by subtracting the purchase price and allowable costs from the sale price, then deducting the £3,000 annual exempt amount. The taxable gain is charged at 18% on any portion within the unused basic-rate band and 24% on the rest. On an £80,000 gain, a higher-rate taxpayer pays £18,480.
| CGT formula | Sale price − purchase price − costs − exempt amount = taxable gain |
| Annual exempt amount | £3,000 per person |
| Basic-rate CGT on property | 18% |
| Higher-rate CGT on property | 24% |
| Reporting deadline | 60 days from completion |
What is the capital gains tax formula for property?
The formula is straightforward: sale price, minus purchase price, minus allowable costs, minus the annual exempt amount, equals the taxable gain. The tax is then applied to that taxable gain at one of two rates, depending on income.
Written out, the calculation has five steps:
- Step 1: Work out the gain. Sale price minus purchase price.
- Step 2: Subtract allowable costs. Solicitor fees, estate agent fees, stamp duty on purchase, and capital improvements.
- Step 3: Subtract the annual exempt amount. £3,000 per person for 2026/27.
- Step 4: Identify the rate. The portion of the taxable gain that fits inside unused basic-rate band is taxed at 18%. Everything above is taxed at 24%.
- Step 5: Calculate the tax. Multiply each portion by its rate and add the results.
The rates above apply to residential property. Other assets use lower rates, but this guide focuses on property because the rates differ and the 60-day reporting deadline adds urgency.
Example 1: A small gain on a basic-rate income
A property bought for £300,000 and sold for £330,000 produces a £30,000 gain. The seller earns £45,000 per year.
| Step | Amount |
|---|---|
| Sale price | £330,000 |
| Less purchase price | −£300,000 |
| Gain before costs | £30,000 |
| Less allowable costs | −£0 |
| Less annual exempt amount | −£3,000 |
| Taxable gain | £27,000 |
| Estimated tax | £6,480 |
Second home, single owner earning £45,000, no allowable costs claimed for simplicity.
Part of the taxable gain falls inside the remaining basic-rate band, so it is taxed at 18% rather than 24%. The split depends on how much of the basic-rate band the salary has already used.
Example 2: A medium gain on a higher-rate income
A property bought for £300,000 and sold for £380,000 produces an £80,000 gain. The seller earns £60,000, which already exceeds the higher-rate threshold of £50,270.
| Step | Amount |
|---|---|
| Sale price | £380,000 |
| Less purchase price | −£300,000 |
| Gain | £80,000 |
| Less annual exempt amount | −£3,000 |
| Taxable gain | £77,000 |
| Tax at 24% | £18,480 |
Higher-rate taxpayer, single owner, second home. The entire taxable gain falls above the basic-rate band.
Because the seller's income already exceeds £50,270, none of the basic-rate band remains. The full taxable gain is charged at 24%.
Example 3: A large gain of £200,000
A property bought for £300,000 and sold for £500,000 produces a £200,000 gain. The seller earns £90,000.
| Step | Amount |
|---|---|
| Sale price | £500,000 |
| Less purchase price | −£300,000 |
| Gain | £200,000 |
| Less annual exempt amount | −£3,000 |
| Taxable gain | £197,000 |
| Tax at 24% | £47,280 |
Higher-rate taxpayer, single owner, second home, no reliefs.
At this level the tax is substantial. Allowable costs matter more with larger gains: every pound of stamp duty, legal fees, or improvement costs reduces the taxable gain pound for pound. A £15,000 kitchen extension on a property like this would save £3,600 in tax.
Which costs can be deducted from the gain?
Allowable costs reduce the gain directly, so they are worth collecting before filing. HM Revenue and Customs accepts:
- Solicitor and conveyancing fees on both the purchase and the sale.
- Estate agent fees on the sale.
- Stamp Duty Land Tax paid when buying the property.
- Survey and valuation fees connected to the purchase or sale.
- Capital improvements that added value: extensions, loft conversions, new bathrooms or kitchens where none existed.
Repairs and maintenance are not allowable. Replacing a boiler, redecorating, or fixing a roof maintains value rather than adding to it. Mortgage interest is also excluded, even on rental properties.
What rates apply to property in 2026/27?
UK residential property is taxed at 18% on gains within the basic-rate band and 24% on gains above it. These rates apply for 2026/27.
The annual exempt amount is £3,000 per person. Joint owners each get their own allowance, so a couple can shelter £6,000 of gain between them.
The gain must be reported and paid within 60 days of completion through an HM Revenue and Customs Capital Gains Tax on UK property account. This is separate from Self Assessment and is the deadline most people miss.
Can I use a calculator instead of working it out by hand?
Yes, and it is faster. The calculator on this site applies the same formula described above, handles the basic-rate band split automatically, and adjusts for joint ownership and Private Residence Relief. It uses the same rates and thresholds published by HM Revenue and Customs.
Working through the calculation manually is still useful to understand what drives the number. Once the pieces fit together, the calculator confirms the figure in seconds.
Use the UK capital gains tax calculator
Common questions
How do I calculate capital gains tax on a property sale?
Subtract the purchase price and allowable costs from the sale price to find the gain. Deduct the £3,000 annual exempt amount. Tax the result at 18% on any portion within the unused basic-rate band and 24% on the rest.
What is the CGT annual exempt amount for 2026/27?
£3,000 per person. It cannot be carried forward to a later year.
Are estate agent fees deductible from capital gains?
Yes. Estate agent fees on the sale are an allowable cost and reduce the gain pound for pound.
Do I need to report if the gain is below the annual exempt amount?
UK residents usually do not need to file the 60-day return if the gain is fully covered by the annual exempt amount or Private Residence Relief. Non-residents must report every disposal regardless.
How long do I have to pay capital gains tax after selling?
60 days from completion, through an HM Revenue and Customs Capital Gains Tax on UK property account. This is separate from the annual Self Assessment return.
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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