In short: For individuals, residential property gains are taxed at 18% (basic rate) or 24% (higher/additional rate), after deducting your £3,000 annual exempt amount, purchase costs, improvement costs and selling costs from the sale proceeds. You must report and pay via HMRC’s CGT UK Property return within 60 days of completion, not wait for your normal Self Assessment deadline. Limited companies don’t pay CGT at all, gains are taxed as company profit under Corporation Tax instead. No further CGT rate rise for residential property was announced in the Autumn Budget 2025.
The current rates
Since the rate cut announced in the October 2024 Budget, individuals selling UK residential property pay:
- 18% on gains that fall within your remaining basic-rate Income Tax band
- 24% on gains above that, in the higher and additional-rate bands
These rates have carried through into both the 2025/26 and 2026/27 tax years unchanged. Your rental profits, salary, and other income use up your basic-rate band first, and any gain that pushes the total above £50,270 gets taxed at the higher 24% rate for the portion above that threshold.
The annual exempt amount
Every individual has an annual exempt amount of £3,000 for the tax year (frozen at this level, down from £12,300 as recently as 2022/23 and £6,000 in 2023/24). If you jointly own a property with a spouse or partner, you each get your own £3,000 allowance, effectively giving a joint £6,000 tax-free before any CGT applies, a meaningful reason many co-owned rental properties are held jointly rather than by one party alone.
How the gain is actually calculated
The gain isn’t simply sale price minus purchase price, you’re entitled to deduct a range of genuine costs:
- Original purchase price, plus the SDLT and legal fees paid on acquisition
- Capital improvement costs, genuine enhancements like an extension, loft conversion, or new kitchen where none existed before (routine repairs and maintenance don’t count; they’re an income tax deduction against rental profit instead, not a CGT deduction)
- Selling costs, estate agent fees, legal fees, and other costs of disposal
Worked example
- Purchase price: £150,000, plus SDLT and legal fees of £5,000 → base cost £155,000
- Extension/improvement: £20,000 → total cost basis £175,000
- Sale price: £280,000, less agent and legal fees of £6,000 → net proceeds £274,000
- Gain: £274,000 − £175,000 = £99,000
- Less annual exempt amount: £99,000 − £3,000 = £96,000 taxable gain
If this landlord is a higher-rate taxpayer for the whole gain: £96,000 × 24% = £23,040 CGT due.
If they’re a basic-rate taxpayer with, say, £10,000 of basic-rate band still unused after their income: £10,000 × 18% = £1,800, plus the remaining £86,000 × 24% = £20,640, totalling £22,440. Gains stack on top of your income for the year, so most landlords selling a property with meaningful gain will find at least part of it taxed at the higher 24% rate.
The 60-day reporting deadline, don’t miss this
Unlike almost every other part of UK personal tax, CGT on UK residential property disposals by individuals has its own fast-track reporting requirement: you must submit a CGT UK Property return and pay an estimate of the tax due within 60 days of completion (not exchange of contracts). This is separate from, and in addition to, reporting the disposal again on your annual Self Assessment return. Missing the 60-day window triggers penalties similar to late Self Assessment filing, and interest accrues on any tax paid late. This catches out landlords more than any other CGT rule, simply because the timeline is so much tighter than the “31 January following the tax year” habit most people are used to for other tax matters.
Limited companies: no CGT, but Corporation Tax on the gain instead
If the property is owned by a limited company, there’s no separate CGT regime at all, the gain on disposal is calculated (using broadly similar principles, with indexation-style adjustments having been phased out long ago) and simply added to the company’s taxable profits for the accounting period, taxed at the applicable Corporation Tax rate: 19% up to £50,000 of total profits, 25% above £250,000, with marginal relief in between (effective marginal rate around 26.5%). There’s no 60-day standalone reporting requirement for companies, it’s dealt with through the normal Corporation Tax return cycle.
Lettings relief and Private Residence Relief nuances
If you’ve ever lived in the property as your main home before letting it out, two reliefs can reduce the gain:
- Private Residence Relief (PRR) covers the period you genuinely lived there as your main residence, plus an automatic final 9 months of ownership regardless of whether you were living there at the point of sale (reduced from 18 months back in April 2020).
- Lettings relief used to be widely available to any landlord who’d once lived in the property, but since April 2020 it’s been sharply restricted: it only applies where you were living in the property at the same time as your tenant (e.g., renting out a room while you lived there, a classic lodger arrangement), not simply where you moved out and then let the whole property. Where it does apply, the relief is capped at the lowest of: the PRR already given, the gain arising from the letting period, or £40,000.
For most “accidental landlords” who moved out and let the whole property to a tenant, lettings relief in its modern, restricted form typically won’t apply, only the time-apportioned PRR for the period you actually lived there, plus the final 9 months, will reduce the gain.
What’s not changing (for now)
Despite persistent rumours ahead of recent Budgets, the Autumn Budget 2025 did not introduce a further increase to residential property CGT rates, nor did it introduce National Insurance on rental income. It did, however, introduce a new annual surcharge from 2028 on homes in England valued above £2 million, and separately raised property income tax rates from April 2027 (see our guide to rental income tax and HMRC reporting and our guide to Section 24 and mortgage interest relief), different measures, but part of the same broader trend of the tax burden on landlords and higher-value property increasing gradually rather than dramatically in any single year.
Related reading
Sources
This is general information, not legal, tax, or financial advice. Figures and rules referenced are accurate to the best of available information as of July 2026 unless stated otherwise. Tax rules depend on personal circumstances, always check current HMRC guidance (gov.uk) or consult a qualified accountant/tax adviser before making decisions.
Last Updated on September 21, 2026