Capital Gains Tax applies to the profit you make when you sell — or otherwise dispose of — a property that is not your main home. The most common scenarios are:
Your main home — the property where you live — is usually fully exempt through Private Residence Relief (see section 3). If you sell a property you have never lived in, PRR does not apply and CGT is due on the full gain above your £3,000 annual exemption.
The October 2024 Budget changed property CGT rates. The previous 28% higher-rate charge on residential property was cut to 24%, and the rates were unified across all asset types.
| Taxpayer Band | CGT Rate 2026/27 | Previous Rate (pre-Oct 2024) |
|---|---|---|
| Basic rate (income up to £50,270) | 18% | 18% (residential) |
| Higher rate (income £50,271–£125,140) | 24% | 28% (residential) |
| Additional rate (income above £125,140) | 24% | 28% (residential) |
| Commercial property — basic rate | 18% | 10% |
| Commercial property — higher rate | 24% | 20% |
Your rate depends on your total taxable income for the year, including the gain. If your income plus the gain spans both the basic and higher rate bands, you pay 18% on the portion within the basic rate band and 24% on the rest. The £3,000 annual exemption is deducted from the gain before the rate is applied.
Every individual has a £3,000 annual CGT exemption — the first £3,000 of net gains each tax year is tax-free. Married couples and civil partners each have their own exemption, giving up to £6,000 of combined gains tax-free on jointly-owned property. Unused exemption cannot be carried forward.
| Tax Year | Annual Exemption |
|---|---|
| 2022/23 | £12,300 |
| 2023/24 | £6,000 |
| 2024/25 | £3,000 |
| 2025/26 | £3,000 |
| 2026/27 | £3,000 |
Private Residence Relief (PRR) exempts the gain on your main home from CGT, provided you lived there for the entire period of ownership and the property was not used for business purposes.
| Scenario | CGT Position |
|---|---|
| Sold main home — lived there entire ownership | Fully exempt (full PRR) |
| Sold main home — let for part of ownership period | Partial CGT on let period |
| Sold main home — used home office (part business use) | Partial CGT on business proportion |
| Sold buy-to-let property | Full CGT — no PRR available |
| Sold second home (never main residence) | Full CGT — no PRR available |
| Sold inherited property (never lived there) | Full CGT from probate value |
| Sold former main home — now let | PRR for lived-in period; last 9 months always exempt |
Even if you no longer live in a property that was your main home, the final 9 months of ownership are always treated as a period of residence for PRR purposes. This helps sellers who have moved out before completing a sale.
If you own two properties, only one can be your main home for PRR purposes at any time. You can elect which property is your main home within two years of acquiring a second property — after that, HMRC decides based on the facts. For couples, you share one main home election between you.
Deducting all allowable costs reduces your gain and therefore your CGT bill. HMRC allows these deductions:
You cannot deduct: mortgage interest, insurance premiums, letting agent fees, repairs or maintenance costs, or general running costs. These are income deductions for landlords, not CGT deductions.
David bought a terraced house in Manchester in 2008 for £130,000. He sells in 2026 for £290,000. His purchase costs were £5,000 (solicitor + stamp duty). He installed a new central heating system in 2015 for £8,000 (capital improvement). Selling costs are £12,000 (estate agent + solicitor). He is a higher-rate taxpayer.
| Sale price | £290,000 |
| Less: purchase price | −£130,000 |
| Less: purchase costs | −£5,000 |
| Less: improvement costs | −£8,000 |
| Less: selling costs | −£12,000 |
| Net gain | £135,000 |
| Less: annual exemption | −£3,000 |
| Taxable gain | £132,000 |
| CGT at 24% (higher rate) |
CGT owed: £132,000 × 24% = £31,680
David must also report and pay within 60 days of completion using HMRC's online CGT service — not just his January Self Assessment return.
Emma inherited her late mother's flat in Bristol in 2022. The probate value was £210,000. She sells it in 2026 for £265,000. Selling costs are £7,000. She is a higher-rate taxpayer. She never lived in the property — no PRR applies.
| Sale price | £265,000 |
| Less: probate value (base cost) | −£210,000 |
| Less: selling costs | −£7,000 |
| Net gain | £48,000 |
| Less: annual exemption | −£3,000 |
| Taxable gain | £45,000 |
CGT owed: £45,000 × 24% = £10,800
Note: Emma's CGT base cost is the 2022 probate value (£210,000), not her mother's original purchase price — so she does not pay CGT on the appreciation before she inherited.
Mark and Priya own a Devon holiday cottage jointly (50/50). They bought it in 2016 for £240,000 and spent £30,000 on improvements (extension). They sell in 2026 for £400,000. Selling costs are £14,000. Mark is a higher-rate taxpayer; Priya is a basic-rate taxpayer.
Gross gain: £400,000 − £240,000 − £30,000 − £14,000 = £116,000 total (£58,000 each)
| Each person's share of net gain | £58,000 |
| Less: annual exemption | −£3,000 |
| Taxable gain per person | £55,000 |
Mark (higher rate): £55,000 × 24% = £13,200
Priya (basic rate): £55,000 × 18% = £9,900
Total household CGT: £23,100 — £4,500 less than if Mark owned it solely at 24%.
Calculate your exact CGT liability on any UK property or asset.
Capital Gains Tax Calculator →If you sell a UK residential property and owe CGT, you must report and pay the estimated tax within 60 days of completion — not just through your annual Self Assessment return. This rule applies even if you haven't yet filed your SA return for the year.
You report through the HMRC Capital Gains Tax service. You need a Government Gateway account. The 60-day clock starts on the completion date — not exchange, not when you receive the funds.
The 60-day rule does not apply to: commercial property, shares and securities, or property where no CGT is due (e.g. full Private Residence Relief). See our full guide: The 60-Day CGT Reporting Rule Explained.