Selling a property can trigger a tax bill you weren’t expecting, especially if it was once your home, later let out, or jointly owned.
This guide explains, in plain English, how Capital Gains Tax (CGT) on property in the UK works, how to estimate what you may owe, and what to do before and after completion to avoid costly mistakes.
In this guide:
Will I pay CGT on my property sale?
You’ll usually pay CGT if:
- the property is not fully exempt under Private Residence Relief (PRR), and
- your taxable gains exceed your available exemptions/loss relief position. (gov.uk)
You’ll often have little or no CGT if:
- it was your only/main home throughout ownership, and
- PRR conditions are fully met. (gov.uk)
Capital Gains Tax rates on property in the UK (2026)
For individuals disposing of UK residential property, current rates are:
- 18% for gains within unused basic rate band
- 24% for gains above that threshold
Annual Exempt Amount (AEA) (individuals): £3,000. (gov.uk)
How to calculate CGT on property
Use this order:
- Sale proceeds
- minus purchase cost
- minus allowable acquisition/disposal costs
- minus qualifying capital improvements
- minus reliefs (e.g., PRR where applicable)
- minus annual exempt amount
- apply 18% / 24% rates based on income band position
Allowable costs typically include solicitor and estate agent fees, and qualifying capital improvements (not routine repairs). (gov.uk)
Private Residence Relief explained
PRR can reduce or remove CGT where the property has been your main home, but it is often only partial in real-life cases (for example, lived there then let out).
Key points:
- Full exemption requires meeting PRR conditions.
- Partial exemption often applies when there are non-qualifying occupation periods.
- Final period treatment is important in computations.
- Lettings relief is restricted and fact-specific. (gov.uk)
For structure-level planning around transfers, read our Property/SPV incorporation strategy article.
Deductible costs: what you can and can’t claim
Usually deductible in CGT computation
- Purchase legal fees
- Sale legal and estate agency fees
- SDLT as part of acquisition cost evidence
- Capital enhancement expenditure
Commonly misunderstood
- Routine repairs/maintenance are generally not enhancement expenditure for CGT.
Keep invoices and completion statements to support your return. (gov.uk)
Before any transfer into company ownership, also review our SDLT on additional properties explainer.
60-day CGT return rules
If CGT is due on a UK residential property disposal, you generally need to report and pay within 60 days of completion. (gov.uk)
If you complete Self Assessment, the disposal normally also needs to be included on the SA return later.
For ongoing tax efficiency planning across rental portfolios, use our Landlord tax planning hub.
Worked examples: property CGT UK
Example 1: Former main home, later let out
- Purchase: £250,000
- Sale: £430,000
- Buy/sell costs: £12,000
- Capital improvements: £18,000
- Gain before PRR: £150,000
- Less AEA (£3,000): £147,000 taxable before band split
If PRR covers part of ownership period only, the remaining chargeable fraction is taxed after exemption/rate application. (Illustrative outcome depends on exact months and band position.) (gov.uk)
Example 2: Buy-to-let disposal
- Purchase: £180,000
- Sale: £300,000
- Allowable costs: £20,000
- Gross gain: £100,000
- Less AEA (£3,000): £97,000 taxable before band split
Tax may be split between 18% and 24% depending on remaining basic rate band. (gov.uk)
Example 3: Joint owners (spouses)
Where ownership is split and both parties can use exemptions/rate bands, overall household CGT can differ materially versus single-owner scenarios. Transfers between spouses/civil partners living together are generally no gain/no loss at transfer stage. (gov.uk)
Pre-sale checklist to reduce avoidable CGT errors
- Confirm legal ownership split
- Confirm residence timeline (for PRR)
- Gather purchase and sale completion statements
- Collect all improvement invoices
- Estimate taxable income for disposal year (rate band impact)
- Draft a provisional CGT computation before exchange
- Prepare for 60-day filing/admin process
Common mistakes that increase property CGT
- Assuming “I lived there once” means full exemption
- Missing the 60-day filing/payment window
- Claiming repairs as enhancement expenditure
- Losing documentary evidence for capital costs
- Ignoring ownership split planning until too late
- Forgetting non-resident reporting obligations where relevant
- Using outdated rates/allowances
Property CGT FAQ (UK)
Do I always pay CGT when selling property?
No. Full Private Residence Relief (PRR) can remove Capital Gains Tax (CGT) on qualifying main home disposals; many other disposals remain taxable. (gov.uk)
What is the CGT rate on residential property in 2026?
18% and 24% apply depending on your taxable income and how much basic rate band remains. (gov.uk)
What is the 60-day CGT rule?
Where applicable, report and pay CGT within 60 days of completion via the UK property disposal process. (gov.uk)
Can I deduct solicitor and estate agent fees?
Yes, qualifying acquisition/disposal costs are usually allowable in the gain computation. (gov.uk)
Can I deduct Accountants/Tax advisor fees?
Yes, qualifying professional costs are usually allowable in the gain computation. (gov.uk)
Can I deduct renovation costs?
Qualifying capital improvements are usually allowable; routine repairs generally are not. (gov.uk)
Do non-residents need to report UK property disposals?
Yes, reporting obligations can apply even where no tax is due in some cases. (gov.uk)
Next steps
If you want a pre-sale CGT estimate with evidence-backed assumptions (before contracts lock in), book a 20-minute planning call.