Capital Gains Tax on Property 2026/27
When you sell a property that isn't your main home, you'll likely owe Capital Gains Tax. This guide explains how CGT works for property sales in 2026/27.
CGT Rates for Property 2026/27
| Tax Band | Residential Property Rate |
|---|---|
| Basic rate | 18% |
| Higher rate | 24% |
Note: Residential property rates are higher than other assets (10%/20%).
Annual Exempt Amount
The first £3,000 of gains each tax year are tax-free.
Example:
- Gain: £50,000
- Less annual exemption: £3,000
- Taxable gain: £47,000
Calculating Your Gain
Basic Calculation
Sale Price - (Purchase Price + Costs + Improvements) = Gain
Allowable Costs
| Cost Type | Examples |
|---|---|
| Purchase costs | Stamp duty, solicitor fees, survey fees |
| Sale costs | Estate agent fees, solicitor fees, EPC cost |
| Improvements | Extensions, new kitchen (not repairs) |
What's NOT Deductible
- Mortgage interest
- Repairs and maintenance
- Insurance
- Furniture
- Your time
The 60-Day Reporting Rule
When you sell UK residential property, you must:
- Report the sale to HMRC within 60 days of completion
- Pay the CGT within 60 days of completion
This applies even if you normally file Self Assessment.
How to Report
Use HMRC's "Report and pay Capital Gains Tax on UK property" online service.
Penalties for Late Reporting
| Delay | Penalty |
|---|---|
| Up to 6 months | £100 |
| 6-12 months | £200 or 5% of tax (whichever higher) |
| Over 12 months | £300 or 5% of tax + further penalties |
Plus interest on late payment.
Tax Band Calculation
CGT uses your unused basic rate band:
Example: £60,000 salary, £30,000 property gain
- Income uses basic rate band first
- £60,000 salary = £47,430 in basic rate band used
- Basic rate band remaining: £50,270 - £47,430 = £2,840
- Gain allocation:
- First £3,000: Tax-free (annual exemption)
- Next £2,840: 18% (basic rate)
- Remaining £24,160: 24% (higher rate)
Tax: (£2,840 × 18%) + (£24,160 × 24%) = £511 + £5,798 = £6,309
Reliefs and Exemptions
Private Residence Relief (PRR)
No CGT on your main home. If partly let or used for business, partial relief.
Letting Relief
If you lived in the property and later let it:
- Up to £40,000 relief
- Only for periods of shared occupation
Principal Private Residence Nomination
If you own multiple properties, you can nominate which is your main home (within 2 years of acquisition).
Spouse Transfers
Transfers between spouses are CGT-free. The receiving spouse inherits your original cost.
Property Held in Companies
Companies pay Corporation Tax on property gains, not CGT:
- Current rate: 25%
- No annual exemption
- Different extraction considerations
Frequently Asked Questions
Do I pay CGT if I sell my only home?
No, if it's your main residence. PRR applies automatically.
What if I inherited the property?
Your base cost is the probate value at date of death, not the original purchase price.
Can I deduct mortgage payments?
No. The mortgage is financing, not a cost of the property. Only mortgage arrangement fees (at purchase) may be deductible.
What about inflation?
Indexation relief was abolished for individuals in 2008. No inflation adjustment is available.
Do I need to report if I made a loss?
You don't need to use the 60-day service for losses, but you should report on Self Assessment to carry the loss forward.
Related Calculators
- Capital Gains Tax Calculator - Calculate your CGT
- Property Sale Calculator - Full sale analysis
- Stamp Duty Calculator - What you paid at purchase