Published: June 2026 | Fact-Checked & Audited By: David Vance, CTA FCA (Chartered Tax Advisor & Accountant)
This guide is fully updated for the 2026/27 HMRC tax year. All calculations and tax rules have been audited against official UK legislation.
For property landlords, buy-to-let investors, and second home owners, Capital Gains Tax (CGT) is one of the most critical tax liabilities to plan for. Selling a residential property in the UK that is not your main residence can trigger a substantial tax bill. Staying up to date with the strict reporting rules and rates is essential to avoid severe penalties. In this guide, we cover the CGT rates on residential property, key deductions, and the strict 60-day payment deadline for the 2026/27 tax year.
What are the Property Capital Gains Tax Rates?
Unlike standard income tax bands, Capital Gains Tax on residential property has its own specific rates. For the 2026/27 tax year, the rates are:
- 18% on gains that fall within your unused basic rate income tax band (up to £50,270).
- 24% on gains that exceed the basic rate threshold (above £50,270).
These rates apply to any residential property that does not qualify for 100% Private Residence Relief (PRR), such as buy-to-let properties, inherited homes, and holiday cottages.
The Strict 60-Day Reporting and Payment Rule
When you sell a taxable UK residential property, you cannot wait until the end of the tax year to report it. You must report the sale and pay the estimated Capital Gains Tax to HMRC within **60 days of the completion date**. Failure to submit the return or pay the tax within this window results in immediate interest charges and late filing penalties.
Deductible Costs to Reduce Your Property Gain
You do not pay tax on the gross sales profit. HMRC allows you to deduct several legitimate expenses from the sales price to lower your taxable gain:
| Deductible Category | Allowable Expenses |
|---|---|
| Acquisition Costs | Original purchase price, solicitor fees, surveyor fees, and Stamp Duty paid. |
| Improvement Costs | Capital improvements that add value (e.g. extensions, loft conversions, rewiring). Note: maintenance or redecorating costs are not deductible. |
| Disposal Costs | Estate agent fees, legal fees, advertising costs, and valuation fees for the sale. |
To run your own property disposal figures and calculate your potential tax liability, use our Capital Gains Tax Calculator.
What People Search For: FAQs on Property Capital Gains Tax
1. How much is capital gains tax on a property sale in the UK?
The property CGT rate is 18% for basic rate taxpayers and 24% for higher or additional rate taxpayers. This rate is calculated on the net gain (sale price minus purchase price and allowable buying/selling/improvement costs).
2. What is the 60-day rule for property capital gains tax?
Under HMRC rules, you must report and pay any Capital Gains Tax due on the disposal of UK residential property within 60 days of the sale completion date. This is done via an online UK Property Tax account.
3. Do you pay capital gains tax when selling your main home?
No, provided the property has been your only or main home throughout your entire period of ownership. This is covered by Private Residence Relief (PRR), which automatically exempts the sale from CGT in most standard residential situations.
4. How much is the capital gains tax allowance on property?
The annual exempt amount for 2026/27 is £3,000 per person. If you own the property jointly with a spouse, you can combine your allowances to get a total of £6,000 tax-free profit on the sale.
5. Can I avoid capital gains tax on buy-to-let properties?
You cannot completely avoid CGT on a buy-to-let, but you can reduce it by claiming all allowable buying, selling, and capital improvement costs, utilizing your annual allowance, transferring shares to a spouse, or moving into the property to claim partial Private Residence Relief.
6. What counts as an allowable capital improvement for property CGT?
Allowable improvements must add value to the property, such as building an extension, installing a new central heating system, or replacing the roof. Routine maintenance, like painting, general repairs, or decorating, cannot be deducted.
7. How is property capital gains tax calculated for non-UK residents?
Non-UK residents selling UK residential property are subject to the same 18% and 24% rates. However, they are only taxed on the gain made since 5 April 2015, rather than the full historical ownership period. The 60-day reporting rule still applies.
8. Do you pay capital gains tax on inherited property?
You do not pay CGT when you inherit a property. Instead, the property value is established at the date of death for probate. If you sell the inherited property later, you will pay CGT on the gain between the probate value and the eventual sale price.
9. Can I offset rental losses against capital gains tax on property sale?
No. Rental losses are income tax losses and cannot be offset against capital gains. You can only offset capital losses (e.g. selling another property or shares at a loss) against your capital gains.
10. What happens if I fail to report a property sale within 60 days?
If you miss the 60-day deadline, HMRC will charge an immediate late filing penalty of £100. Further penalties apply after 3 months and 6 months, and interest will accrue on the unpaid tax from the 61st day until it is settled.