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Landlord glossaryTax

Capital Gains Tax (CGT)

Tax on the gain when you sell or give away a property that is not your main home. For residential property the rates are 18% on gains within the basic rate band and 24% above it, and the annual exempt amount is £3,000. If tax is due on the sale of UK residential property, you must report it and pay within 60 days of completion.

Reviewed by Erdem VolkanLast reviewed 16 September 2026How we check facts

Annual exempt amount
£3,000
Rates on residential property
18% and 24%
Report and pay
Within 60 days of completion, if tax is due
Also on
Your Self Assessment return

Why it matters

What Capital Gains Tax (CGT) means for a landlord

CGT is the tax landlords most often get wrong because the 60-day residential property return is separate from the self-assessment cycle. Miss it and you are straight into penalties and daily interest. The shrinking annual exempt amount (£3,000) plus the 18% / 24% rate split means any gain above a small slice is taxable, and gains over multiple ownership years need to be apportioned to reflect letting versus primary-residence periods.

Worked example

How it plays out

Daniel sells a buy-to-let house in Bristol in June 2026 for £320,000. He bought it for £210,000, paid £6,000 in buying and selling costs and spent £14,000 on a loft conversion, so his gain is £90,000. After the £3,000 annual exempt amount, £87,000 is taxable. He is a higher-rate taxpayer, so the rate is 24% and the tax about £20,880, which he must report and pay within 60 days of completion. He also includes the sale on his Self Assessment return, where the payment already made is taken into account.
An illustrative example. Names, places and figures are made up.

Common mistakes

Where landlords go wrong

  1. 01Waiting for the Self Assessment deadline, when tax on a UK residential property gain is due within 60 days of completion.
  2. 02Forgetting that capital improvements and buying and selling costs reduce the gain.
  3. 03Deducting a repair from the gain that was already claimed against rental income.
  4. 04Assuming a former home is fully exempt, when Private Residence Relief may only cover the years you lived there plus the final nine months.

What to do

A short checklist

  • Keep purchase, sale and improvement invoices for every property you own.
  • Estimate the gain and the tax before you agree a sale, so the money is set aside.
  • Diary the 60-day deadline from the completion date.
  • Take advice if the property was ever your home or is jointly owned.

Sources

Checked against these sources on 16 September 2026. A guide to the rules in England, not legal advice: for a dispute or a possession claim, speak to a solicitor.

All glossary termsRenters’ Rights Act 2025UK regulationsLandlord guides