If you sell a property that is not your main home, you may have to pay Capital Gains Tax (CGT) on the profit. Many people only find out about the tax after the sale, and then they rush to meet a short deadline. This guide explains, in simple English, when CGT applies to property, how to work out the gain, the rates, and how to report and pay it.
All rates, allowances and deadlines in this article were checked on GOV.UK on 15 October 2026. They apply to the 2026/27 tax year (6 April 2026 to 5 April 2027) unless we say otherwise.
What is Capital Gains Tax?
Capital Gains Tax is a tax on the profit (the “gain”) you make when you sell or give away something that has gone up in value. You pay tax on the gain, not on the full amount you receive.
For example, if you bought a flat for £200,000 and sold it for £260,000, the starting point is a gain of £60,000. You can then take off some costs and your tax-free allowance before any tax is worked out.
Which property sales can mean paying CGT?
GOV.UK says you may have to pay CGT when you sell or dispose of property that is not your home. This includes:
- buy-to-let and other rental properties
- business premises
- land
- inherited property
“Dispose of” does not only mean selling. Giving a property away, or transferring it to someone else, can also count. There are some exceptions. Gifts to a husband, wife, civil partner or a charity usually do not create a CGT bill.
Selling your own home: Private Residence Relief
You do not usually pay tax when you sell your home. This is because of Private Residence Relief. According to GOV.UK, you get full relief if all of these are true:
- you have one home and you have lived in it as your main home for all the time you have owned it
- you have not let part of it out (a lodger does not count)
- you have not used part of it only for business (using a room as an office now and then does not count)
- the grounds, including all buildings, are less than 5,000 square metres in total
- you did not buy it just to make a gain
If one of these is not true, you may still get some relief, but you may have some tax to pay.
The final 9 months
You always get relief for the last 9 months before you sell, as long as the property was your only or main home at some point while you owned it.
Time away from home
Some periods away from home can still qualify for relief, for example periods adding up to 3 years for any reason, or up to 4 years if you had to live elsewhere in the UK for work. You must usually have lived in the home before and after the time away. Married couples and civil partners can only have one main home at a time.
How to work out your gain
The gain is usually the difference between what you paid for the property and what you got when you sold it. In some cases you must use the market value instead, for example if you gave the property away, sold it for less than it was worth to help the buyer, or owned it before April 1982. If you own the property with someone else, you only work out the gain on your share.
Costs you can take off
GOV.UK says you can deduct costs such as:
- estate agents’ and solicitors’ fees
- costs of improvement works, for example an extension
Costs you cannot take off
Normal maintenance costs, such as decorating, do not count. Keep receipts and invoices for any improvement work, because you may need to show them to HMRC.
The tax-free allowance
Each person has a CGT tax-free allowance, called the Annual Exempt Amount. For individuals it is £3,000 (£1,500 for trusts), as shown on GOV.UK on 15 October 2026. You only pay CGT on gains above this amount.
If a property is owned jointly, each owner can use their own allowance against their share of the gain.
Capital Gains Tax rates for 2026/27
The rate you pay depends on your income. GOV.UK gives these rates for gains made from 6 April 2026:
- 18% on the part of your gain that falls within the basic rate Income Tax band
- 24% on the part of your gain above the basic rate band
- Higher and additional rate taxpayers pay 24% on their gains
To work out which rate applies, you add your taxable gain to your taxable income. GOV.UK gives the basic rate band as £37,700 for the 2026/27 tax year. If your taxable income plus your taxable gain is more than this, part of the gain will be taxed at 24%.
A simple example
Imagine Sara sells a buy-to-let flat in 2026/27. After costs, her gain is £23,000. She takes off the £3,000 allowance, so her taxable gain is £20,000. Her taxable income (after her personal allowance) is £30,000, so she has £7,700 of the basic rate band left. That £7,700 is taxed at 18% (£1,386) and the other £12,300 is taxed at 24% (£2,952). Her total CGT is £4,338.
This example is simple and for illustration only.
The 60-day deadline to report and pay
This is the part that catches many people out. If you sell a UK residential property and there is CGT to pay, you must report the sale and pay the tax within 60 days of completion. You do this using HMRC’s online “Capital Gains Tax on UK property” service.
If you report or pay late, you may have to pay interest and a penalty.
- UK residents: you do not need to report online if your total gains are less than the tax-free allowance.
- Non-UK residents: you must report all sales and disposals of UK property or land by the deadline, even if there is no tax to pay.
If you already send a Self Assessment tax return, you may also need to include the sale there. Our Self Assessment tax return service costs £120.
Getting help
Keep your purchase papers, solicitor bills and improvement invoices safe, and start working out the tax before completion so the 60 days do not run out. If you want an accountant to work out your gain and report it for you, see our Capital Gains Tax service.
FAQ
Do I pay Capital Gains Tax when I sell my home?
Usually not. If it has been your only main home for the whole time you owned it, and the other Private Residence Relief conditions are met, there is normally no CGT to pay.
What is the CGT allowance for 2026/27?
For individuals it is £3,000 (checked on GOV.UK on 15 October 2026).
What rate of CGT do I pay on a buy-to-let property?
For gains from 6 April 2026, it is 18% on the part within the basic rate band and 24% on the rest. Higher and additional rate taxpayers pay 24%.
How long do I have to report a property sale?
For UK residential property, you must report and pay any CGT due within 60 days of completion.
Can I take off the cost of a new kitchen or redecorating?
Improvement works, such as an extension, can be deducted. Normal maintenance, such as decorating, cannot. Whether a new kitchen is an improvement or a repair depends on the facts, so ask an accountant.
This article is general guidance, not personal tax advice.
Need help? Call UK Tax Co on 020 7050 0712 or WhatsApp 07579566666.