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Landlord tax · Capital Gains Tax

Capital Gains Tax on rental property: how it works in 2026/27

Sell a buy-to-let or second home at a profit and you'll usually owe Capital Gains Tax (CGT) on the gain. As the law stands today, UK residential property is taxed at 18% or 24%, you get a £3,000 tax-free allowance, and any tax due must be reported and paid within 60 days of completion. Here's the current-law picture, in plain English.

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General information, not legal or tax advice · last reviewed 19 September 2026 · always verify with GOV.UK or an accountant

Before the Budget

Rates could change on 28 October 2026 — this is the law today

An Autumn Budget is scheduled for 28 October 2026, and CGT is regularly reviewed at fiscal events. There has been plenty of pre-Budget speculation about property tax, but nothing has changed until the government actually confirms it. Everything below describes the rules as they stand at the time of writing. Treat rumour as rumour, and check GOV.UK for the current position before you act.

For the confirmed-vs-rumoured picture on landlord tax generally, see our blog: what's confirmed vs what's rumour.

The headline numbers

The three figures that matter

The rate

18% or 24%

On residential property, 18% for gains within your remaining basic-rate band and 24% above it. Since the October 2024 Budget there's no separate higher property rate — it fell from 28% to 24%.

The allowance

£3,000

Everyone has an annual exempt amount — a tax-free slice of gains each tax year. For 2026/27 it's £3,000 (down from £6,000 in 2023/24). You pay CGT only on gains above it.

The deadline

60 days

If CGT is due on a UK residential sale, you must report and pay within 60 days of completion via HMRC's UK Property Reporting Service — separate from your Self Assessment return.

These figures are set by the government and can change — confirm the current numbers on GOV.UK.

Which rate applies

18% or 24% — how the two rates work

Your CGT rate on residential property depends on your total taxable income plus the gain in the year you sell. The gain effectively sits "on top" of your income:

🟢 18% — within the basic-rate band

Any part of the taxable gain that, added to your income, still falls inside the basic-rate income band (up to the higher-rate threshold — £50,270 at the time of writing) is taxed at 18%.

🔴 24% — above the threshold

Any part of the gain above that threshold — which is where most landlords selling a decent gain end up — is taxed at 24%. Higher and additional-rate taxpayers pay 24% on the whole taxable gain.

The £50,270 higher-rate threshold and the personal allowance are income-tax figures set by the government and can change. This is a simplified explanation, not a calculation of your bill — check GOV.UK or ask an accountant for your own numbers.

Working out the gain

What's taxed — and what you can knock off

CGT is charged on the gain, not the sale price. In outline: sale price, minus what you paid, minus allowable costs, minus reliefs and the annual allowance — the rest is taxable.

✅ Usually deductible

  • The original purchase price and the Stamp Duty Land Tax you paid on it
  • Legal and conveyancing fees on buying and selling
  • Estate agent fees on the sale
  • Capital improvements that added value — e.g. an extension or a first-time kitchen/bathroom

❌ Not deductible against the gain

  • Routine repairs & maintenance — these are income-tax expenses, not capital costs
  • Like-for-like replacements that just restore the property
  • Mortgage interest (relieved separately, and now restricted, against rental income)
  • Your own time managing the works

The line between a deductible improvement and a non-deductible repair is a common trap — keep every invoice and completion statement so you can support the figures. See GOV.UK: work out your gain.

If it was once your home

Private Residence Relief and letting

If a property was genuinely your only or main home for part of the time you owned it, Private Residence Relief (PRR) can take a big chunk out of the gain:

  • The period it was your main home is normally fully relieved
  • The final 9 months of ownership always count as qualifying, even after you moved out
  • Relief is broadly time-apportioned between qualifying and non-qualifying periods
  • No PRR at all if you never lived there as your main home — a pure buy-to-let gets none
  • The years it was let (beyond that final 9 months) are generally chargeable
  • Lettings relief is now very limited — broadly only where you shared occupancy with the tenant

PRR calculations depend heavily on your own dates and circumstances, and get complex fast. This is a general outline — check GOV.UK: tax when you sell your home and consider professional advice before relying on it.

Easy to get wrong

The mistakes that cost landlords

⚠️ Watch out for

  • Missing the 60-day reporting-and-payment window after completion
  • Assuming the gain is taxed at your income-tax rate — it isn't, it's 18%/24% for property
  • Forgetting to claim purchase costs, SDLT and improvement spend against the gain
  • Losing the receipts and completion statements you need years later when you sell

💡 A few things to know

  • Transfers between spouses/civil partners are usually made on a no-gain/no-loss basis — which can double the allowances used on a later sale
  • Capital losses can be set against gains, and unused losses carried forward if reported
  • Properties held in a limited company pay Corporation Tax on gains, not CGT
  • Rates and allowances can move at a Budget — see the note above

Related reading: should landlords sell before the Budget? and Making Tax Digital for landlords.

Where LandlordProof fits

We don't do your tax — we keep the paperwork sale-ready

A CGT calculation depends on records you gathered years earlier: what you paid, the SDLT, the improvement invoices, the dates. LandlordProof keeps them together per property so they're there when you sell:

  • Store purchase completion statements and improvement invoices in the document vault
  • Keep key dates and documents in one place, per property
  • Retrieve the evidence in one click when you (or your accountant) need it
  • Stay compliant across the whole tenancy, right up to the sale

Honest about it: LandlordProof is not tax software, an accountant or a CGT calculator — it doesn't work out or file your tax. It's a record-keeping and reminder tool, and it isn't legal or tax advice. For the tax itself, use GOV.UK or a qualified accountant. See the full toolkit on the compliance tracker.

Free for your first property. Up to 30 properties, the document vault and the full toolkit for £39/year (about £3.25 a month). No card to start.

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Set up a free account in about a minute. Store the completion statements, improvement invoices and documents a future CGT calculation depends on — plus every compliance certificate — in one place, per property. No card, no trial countdown.

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