Capital Gains Tax on UK Property: How Much Will You Pay in 2026?

A clear explainer on CGT rates, allowances, deductible costs, the 60-day reporting deadline, and how the rules apply to non-UK residents.

A client who sold a buy-to-let flat in South London last year called us the week after completion. He had no idea he was supposed to have reported and paid his capital gains tax within 60 days. He thought it went on his self-assessment return in January. By the time he called, the penalty clock had been running for several weeks.

He is far from alone. CGT on property is one of the most commonly misunderstood areas of UK tax, and the cost of getting it wrong has risen sharply as the annual exempt amount has been cut from £12,300 in 2022/23 to just £3,000 today. More people are now caught, more gains are now taxable, and the 60-day deadline catches out sellers who simply do not know it exists.

This guide sets out the current rates and rules for 2026, what you can deduct, and where people typically go wrong.

CGT on property in 2026: the rates

When you sell a UK residential property that is not your only or main home, any profit above your annual exempt amount is subject to capital gains tax. For the 2026/27 tax year, the CGT rates on residential property are:

Taxpayer band	CGT rate on residential property
Basic rate taxpayer	18%
Higher or additional rate taxpayer	24%
Annual exempt amount (2026/27)	£3,000

The rate that applies depends on the size of your total income plus your gain in that tax year. If your income already uses most or all of the basic rate band (broadly, taxable income up to £50,270 in 2026/27), then the majority of a property gain will be taxed at 24%.

The annual exempt amount (AEA) for individuals is £3,000 for 2026/27. This is the portion of your gain on which no tax is due. It has fallen from £12,300 in 2022/23 and there is no indication it will rise.

Worked example: higher rate taxpayer, £50,000 gain

Total gain	£50,000
Less: annual exempt amount	£3,000
Taxable gain	£47,000
CGT at 24%	£11,280

In the 2024/25 tax year, 163,000 taxpayers filed a CGT on UK property return, reporting £10.3 billion in gains and £2.2 billion in total CGT liabilities on residential property. That was a 33% increase in liabilities on the previous year. (Source: HMRC Capital Gains Tax Statistics, 2025.) The direction of travel is clear.

What you can deduct to reduce the gain

The gain HMRC taxes is not the gross difference between what you paid and what you sold for. Several costs are allowable deductions, and they can make a meaningful difference to the final number.

Purchase costs you can deduct include the original purchase price, stamp duty paid on acquisition, legal fees on purchase, and survey or valuation fees at the time of buying.

Sale costs you can deduct include estate agent fees, legal fees on the sale, and any required compliance costs.

Improvement costs are deductible where the work added value to the property, such as an extension, a loft conversion, a new kitchen or bathroom, or a structural alteration. Ordinary maintenance and repair costs do not qualify. Repainting the hallway does not reduce your CGT bill. Adding a bedroom does.

Keeping records of improvement works is important. HMRC can and does challenge claims where receipts and planning consents cannot be produced. If you have owned a property for many years and carried out significant works, it is worth gathering that documentation before sale.

Principal Private Residence relief

If you are selling your only or main home, you may pay no CGT at all thanks to Principal Private Residence (PPR) relief. PPR automatically exempts the proportion of any gain that relates to the period the property was your main residence.

For most straightforward sales of a family home that was always lived in, PPR wipes out the entire gain. No CGT, no return required.

Where it gets more nuanced is when you lived there for only part of your ownership period. The gain is apportioned between the qualifying residence period (exempt) and any other period (potentially taxable). The final 9 months of ownership are always treated as qualifying residence, regardless of whether you were actually living there, provided the property was your main home at some point.

If you let the property out after moving, the period of letting does not attract PPR other than the automatic final 9 months. That portion of the gain is taxable. Lettings relief was reformed in April 2020 and now only applies where you were sharing the property with your tenant at the time of the letting. If you moved out and rented the whole property, lettings relief almost certainly does not apply.

Married couples and civil partners can only nominate one main residence between them. If you own two properties and have not made a formal PPR nomination, HMRC will determine which was your main home based on the facts.

The 60-day reporting deadline: the trap most people fall into

When you sell a UK residential property that generates a taxable gain, you must report the disposal to HMRC online via the UK Property Account, and pay the CGT due, within 60 days of completion. Not exchange. Not the end of the tax year. 60 calendar days from the date you legally complete the sale.

This is entirely separate from your annual self-assessment return. Even if you file a self-assessment return in January, that does not discharge the obligation to report and pay within 60 days.

When penalty arises	Penalty
Day 61 onwards	£100 fixed penalty
6 months late	£300 or 5% of tax due (whichever is greater)
12 months late	A further £300 or 5% of tax due
90 days to 6 months	Daily penalties of £10 per day
Late payment interest	Bank of England base rate + 2.5%

No 60-day return is required where the gain is fully covered by PPR relief, or where the property is sold at a loss.

CGT for non-UK residents

If you are not a UK tax resident and you sell UK residential property, you are still subject to CGT. Non-resident capital gains tax (NRCGT) has applied to disposals of UK residential property since April 2015 and was extended to all UK land and property from April 2019.

The rates are the same as for UK residents: 18% or 24% depending on the level of UK-source income in the tax year of disposal. The annual exempt amount of £3,000 is also available, though non-residents cannot offset losses from non-UK asset disposals against UK property gains.

The 60-day reporting and payment obligation applies to non-residents in exactly the same way as to UK residents. The return is filed via HMRC’s online UK Property Account, which can be accessed from abroad.

One significant provision for non-residents who held UK property before April 2015 is the option to rebase the cost to the April 2015 market value. This can substantially reduce the taxable gain, particularly on properties that appreciated significantly before that date. It is an election that must be made at the time of disposal.

If you are an expat or foreign national selling UK property, you may also need to consider the treaty position between the UK and your country of residence. A number of double tax treaties contain provisions that affect how UK property gains are taxed in the overseas jurisdiction, and specialist advice in both countries is often appropriate.

What a Burnham government could mean for CGT

The political backdrop to all of this is shifting. Andy Burnham, who looks set to become Prime Minister following Labour’s internal leadership change, has made no secret of his view that the UK tax system is structurally unbalanced. His argument, stated repeatedly over the years, is that Britain over-taxes people’s work and under-taxes their assets. For anyone sitting on a property gain, that framing is worth paying attention to.

No firm CGT policy has yet been announced. Burnham’s economic speech on 29 June 2026 was silent on capital gains tax specifically, and his team is understood to be reserving detailed decisions for a Budget expected later this year. However, his most prominent potential chancellor, Wes Streeting, has publicly indicated that he would look at aligning CGT rates more closely with income tax rates, with carve-outs for genuine entrepreneurship and business reinvestment. If that were to happen, a higher-rate taxpayer selling an investment property could face CGT at 40% rather than the current 24%. (Sources: Grant Thornton, 30 June 2026; Bishop Fleming, 23 June 2026.)

None of this is confirmed. A Budget must come before any of it becomes law, and Burnham has committed to keeping within existing fiscal rules, which limits the political headroom available. But if you are considering a disposal that carries a meaningful gain, it is sensible to take advice sooner rather than later. The direction of travel on property and wealth taxation appears to be broadly understood, even if the precise destination is not.

When a specialist mortgage broker matters

CGT planning and mortgage advice are more closely connected than people often realise. The decision about whether to sell a property, remortgage and hold it, or restructure a portfolio has CGT consequences alongside the financing implications. Holding a property within a limited company, for instance, means company-level corporation tax on gains rather than personal CGT, which changes the calculus depending on your circumstances.

At London FS, we work regularly with clients navigating disposals, portfolio restructures, and decisions about when to realise gains. Our role is the mortgage and finance piece, but we coordinate closely with tax advisers and solicitors to ensure the structure makes sense across the board.

Frequently Asked Questions

Nothing in this article constitutes financial, legal, or tax advice. CGT rules are subject to change and depend on individual circumstances. Please speak with a qualified tax adviser before making any decisions about property disposals.

Thinking about selling a property and want to understand the financing picture alongside the tax position?  Speak to a London FS adviser