Selling a buy-to-let in the 2026–27 tax year? Capital Gains Tax (CGT) rules for UK residential property changed materially between 2023 and 2024, and understanding them is the difference between a clean exit and a painful HMRC bill plus penalties.
Three headline facts every landlord needs to know for 2026:
This is the complete 2026 guide: how to calculate the gain, which reliefs apply, how to report, and realistic planning moves to reduce the bill.
Disclaimer: this is editorial guidance, not personal tax advice. Every CGT scenario is different — use a qualified tax adviser for material disposals.
How CGT on residential property works in 2026
The basic formula
> Gain = Sale price − Purchase price − Allowable costs − Reliefs − Annual exempt amount
Allowable costs include:
Not allowable:
CGT rates 2026–27
| Taxable income + gain band | Rate on residential property gain |
|---|---|
| Basic-rate (up to £50,270) | 18% |
| Higher-rate (£50,271–£125,140) | 24% |
| Additional rate (£125,140+) | 24% |
Note: the gain is added to your taxable income to work out which band each slice falls in. A typical higher-rate landlord pays 24% on most of the gain.
The shrinking allowance
The annual exempt amount has been cut aggressively:
For married couples / civil partners, two allowances are available if the property is jointly owned (or transferred beforehand — see planning below).
Worked example: typical higher-rate landlord sale
Scenario: You bought a BTL in 2014 for £180,000 and sell in June 2026 for £320,000.
Costs breakdown:
| Item | Amount |
|---|---|
| Sale price | £320,000 |
| Purchase price | (£180,000) |
| SDLT on purchase | (£1,500) |
| Legal fees (both sides) | (£2,800) |
| Estate agent sale fee (1.5%) | (£4,800) |
| New kitchen 2019 (capital improvement) | (£8,000) |
| Gross gain | £122,900 |
| Annual exempt amount | (£3,000) |
| Taxable gain | £119,900 |
Tax calculation (higher-rate taxpayer, all at 24%):
£119,900 × 24% = £28,776 CGT due
Key points:
Private Residence Relief (PRR)
If you lived in the property as your main residence at any point during ownership, you can claim Private Residence Relief for that period.
How PRR works
Relief = (Period of main residence + final 9 months) ÷ Total ownership period × Gain
Worked example
Qualifying period for PRR: 48 months lived-in + 9 final months = 57 months
PRR relief = 57 / 192 × £122,900 = £36,499
Taxable gain after PRR = £122,900 − £36,499 − £3,000 allowance = £83,401
CGT (higher-rate) = £20,016
PRR alone saved £8,760.
Letting Relief (restricted since 2020)
Letting Relief was dramatically cut in 2020. It now only applies where you shared occupation with the tenant (e.g., a lodger in your own home). For most landlords Letting Relief no longer applies to standard BTL sales where you moved out completely.
The 60-day reporting rule (critical)
Since 27 October 2021, you must:
Access: gov.uk/capital-gains-tax/report-and-pay-capital-gains-tax — sign in with your Government Gateway ID.
Penalties for missing the 60-day rule
| Days late | Penalty |
|---|---|
| 1 day | £100 fixed |
| 3 months | £100 + daily penalty up to £900 |
| 6 months | Further 5% of tax due (min £300) |
| 12 months | Another 5% of tax due (min £300) |
Plus interest on late-paid tax at HMRC’s prevailing rate (~7.75% in spring 2026).
Moral: do not miss this window. Most conveyancers will flag it on completion, but you, the seller, remain legally responsible.
CGT planning moves landlords actually use
1. Transfer a share to spouse before sale
Transfers between spouses / civil partners are no-gain / no-loss for CGT. Before sale, you can transfer up to 50% (or any proportion) so that:
This must happen well before completion and ideally through a proper deed of trust or Land Registry transfer. Speak to a solicitor and tax adviser — HMRC tests the timing.
2. Offset capital losses
Capital losses from other disposals (shares, other property) can be set against the BTL gain. Losses not used in the current year carry forward indefinitely.
3. Use your ISA / pension to contribute pre-sale
Pension contributions extend your basic-rate band, potentially moving a slice of the gain from 24% to 18%. A £10,000 gross pension contribution could save £600 of CGT if it shifts £10,000 of gain into basic rate.
4. Consider incorporation (before sale)
If you have multiple BTLs and are considering a limited company, incorporation relief (s.162 TCGA 1992) may defer the gain — but it’s complex (needs a genuine business, SDLT implications, lender cooperation) and only works for serious portfolios. Always take specialist advice.
5. Time the sale
If you’re borderline between basic and higher-rate in a given year, delaying or accelerating by a tax year can save ~6% on a slice of the gain.
FAQs
Is the CGT annual exempt amount really only £3,000 in 2026?
Yes. From 6 April 2024 onwards the allowance is £3,000 per person per year. It applies across all CGT disposals, not just property.
What date do I use for CGT — exchange or completion?
Exchange of contracts is the disposal date for CGT. The 60-day report / payment window runs from completion, which is the bit people miss when exchange and completion are in different months.
Do I pay CGT if the property is in a limited company?
No. Limited companies pay corporation tax (19–25% in 2026) on the chargeable gain, not CGT. No 60-day rule and no annual exempt amount for companies. Indexation allowance frozen at December 2017 may still apply on older assets.
Can I gift the property to my children without CGT?
No. A gift is treated as a deemed disposal at market value. You’ll pay CGT as if you’d sold. The only exceptions are spouse transfers (above) and charity gifts.
Do I pay CGT if I sell at a loss?
No, but report the loss so you can use it against future gains. You must claim the loss within 4 years of the end of the tax year in which it arose.
Where to go next
Start your 7-day LetCompliance trial to track per-property capital costs, store conveyancing docs and export tax packs for your accountant.
Frequently asked questions
What are CGT rates on residential property for landlords in 2026?
For residential property disposals from 6 April 2024, the rates are 18% for gains within your basic-rate band and 24% for gains in the higher-rate band (reduced from 28% previously). The annual exempt amount is £3,000 per person (halved from £6,000 in 2023–24). These rates apply to most UK buy-to-let sales in the 2026–27 tax year.
What is the 60-day CGT reporting rule?
Since 27 October 2021, you must report and pay CGT on UK residential property disposals within 60 days of completion, using HMRC’s online Capital Gains Tax on UK property account. Missing the deadline triggers £100 immediate penalty, further daily penalties after 3 months, and interest on unpaid tax. You still declare the disposal on your annual Self Assessment too.
Does Private Residence Relief apply to a let property I once lived in?
Partially. If you lived in the property as your main residence for part of the ownership period, you get full PRR for that period plus the final 9 months. The let period is taxable unless Letting Relief applies (now restricted to shared occupation only). Calculations use a time-apportioned fraction of the gain. Get an accountant to run the figures — a mistake here costs thousands.
Can I offset BTL losses against CGT?
Capital losses on other property sales can be offset against the gain — either in the same year or carried forward. Rental losses (income-tax losses) cannot be offset against capital gains — they stay in the rental property business. Also available: indexation / inflation relief is not available to individuals (abolished in 2008), but incidental costs of purchase and sale (SDLT, legal fees, estate-agent fees, capital improvements) reduce the gain.