Capital Gains Tax on Property 2026/27: Rates, Reliefs and the 60-Day Deadline

Capital gains tax on property is charged at 18% or 24% in 2026/27, depending on how much of your basic rate band is left once your income is counted. You pay it on the profit from selling a property that is not your only or main home, after deducting allowable costs and the £3,000 annual exempt amount — and if it is residential property, you normally have to report and pay within 60 days of completion.

Key points

• The annual exempt amount is £3,000 for 2026/27. Gains above that are taxed at 18% up to the top of the basic rate band and 24% above it.
• The basic rate band used for CGT is £37,700 of taxable income and gains combined — the same across the whole UK, including Scotland.
• Your main home is usually fully covered by Private Residence Relief, so most home sales produce no tax at all.
• Residential property disposals must be reported on a standalone CGT return and paid within 60 days, even if you also file Self Assessment.
• There is no UK "6 year rule" — that is an Australian rule. The UK equivalents are the final 9 months of ownership and the deemed-occupation rules.

When you pay capital gains tax on property

CGT bites when you dispose of a property that has gone up in value and no relief covers the gain. "Disposal" is wider than selling: it includes gifting a property, transferring it into a trust, swapping it, or receiving an insurance payout for its loss.

You will typically owe CGT on:

• A buy-to-let or holiday let you have never lived in as your main home.
• A second home, including one you use yourself part of the year.
• An inherited property sold for more than its probate value (your cost is the value at the date of death, not what the deceased paid).
• A property you gifted to a child or other relative — the gain is calculated on market value at the date of the gift, even though no money changed hands.
• Land or commercial property held as an investment.

You will normally owe nothing on the sale of your only or main home, because Private Residence Relief covers the whole gain. Transfers between spouses and civil partners who live together also happen on a "no gain, no loss" basis, so no tax arises at that point — the receiving partner simply inherits the original cost.

Two points catch people out. First, the gain is measured at exchange of contracts for tax-year purposes, not completion — although the 60-day clock runs from completion. Second, if you are non-resident, you must report a disposal of UK property within 60 days even if there is no gain and no tax to pay.

The 18% and 24% rates explained

CGT rates are not a flat percentage. You stack your gains on top of your taxable income and see where they land.

The basic rate band for CGT is £37,700 of taxable income (income after the £12,570 Personal Allowance). If your taxable income already uses all of it, the whole gain is taxed at 24%.

Scotland and Wales: CGT is not devolved. Scottish income tax rates and bands apply to your non-savings income only — for CGT you use the UK-wide £37,700 basic rate band and the 18%/24% rates. A Scottish taxpayer paying 42% on salary still pays 24% on a property gain.

One consequence worth knowing: a gross personal pension contribution extends your basic rate band, which can move part of a gain from 24% to 18% as well as saving income tax. You can test the effect with the pension tax relief calculator.

How to calculate the capital gain on a property

The arithmetic is: sale proceeds, minus what you paid, minus allowable buying and selling costs, minus capital improvements. Then apply reliefs, then the £3,000 allowance.

What you can and cannot deduct

The improvement-versus-repair line is the one HMRC queries most. A new kitchen of broadly similar standard replacing a worn-out one is a repair (deductible against rental profits instead). Knocking through to create an extra room is an improvement (deductible against the gain). Keep the invoices either way.

Worked example: a buy-to-let sale

A landlord bought a flat for £220,000, paying £2,100 stamp duty and £1,200 in legal fees. They spent £25,000 on an extension. They sell for £360,000, paying £4,500 in agent fees and £1,500 in legal costs.

• Proceeds: £360,000
• Less selling costs: £4,500 + £1,500 = £6,000
• Less purchase price and buying costs: £220,000 + £2,100 + £1,200 = £223,300
• Less improvement: £25,000
• Gain = £360,000 − £6,000 − £223,300 − £25,000 = £105,700
• Less annual exempt amount: £105,700 − £3,000 = £102,700 taxable

Their salary is £50,000, so taxable income is £50,000 − £12,570 = £37,430. Basic rate band left = £37,700 − £37,430 = £270.

• £270 at 18% = £48.60
• £102,430 at 24% = £24,583.20
• Total CGT = £24,631.80, due within 60 days of completion

You can run your own figures through the capital gains tax on property calculator rather than doing this by hand — it handles the band split and part-year ownership automatically.

Reliefs that cut the bill

Private Residence Relief (PRR)

PRR exempts the part of the gain relating to periods when the property was your only or main residence, plus the final 9 months of ownership whether you lived there or not. Relief is worked out in months.

Take the £105,700 gain above, but assume the owner lived in the flat for 6 years (72 months) and let it for the next 6 years (72 months), owning it for 144 months in total:

• Qualifying period: 72 months of occupation + 9 final months = 81 months
• PRR = £105,700 × 81/144 = £59,456.25
• Chargeable gain = £105,700 − £59,456.25 = £46,243.75
• Less the £3,000 allowance = £43,243.75 taxable

The final period is extended to 36 months if you are disabled or move into a care home, subject to conditions. If you own two homes you can nominate which is your main residence, and the nomination must normally be made within two years of the combination of properties changing.

Is there a "6 year rule"?

No. The "6 year rule" people search for belongs to the Australian tax system, where a former main home can stay exempt for up to six years of absence. The UK has narrower deemed occupation rules instead. Broadly, certain absences can still count as occupation provided the property was your main home before the absence and you return to it afterwards: up to 3 years of absence for any reason, up to 4 years where your work required you to live elsewhere in the UK, and any period spent working abroad. There is also a concession where your job prevents you returning. These are technical and fact-specific, so the safest approach is to work out the months and check the conditions against HMRC's guidance before relying on them.

Lettings relief

Since April 2020, lettings relief only applies where you shared occupation of the property with your tenant. If you moved out and let the whole place, it is not available. Where it does apply, it is capped at the lower of £40,000, the PRR amount, or the gain attributable to the letting.

Losses and spreading gains

Capital losses on other assets — including a property sold at a loss — are set against gains in the same year, and unused losses can be carried forward indefinitely once reported to HMRC. The £3,000 annual exempt amount cannot be carried forward: if you do not use it in a tax year, it is gone. Where a property is jointly owned, each owner uses their own allowance and their own bands against their share of the gain.

The 60-day reporting deadline

If a UK residential property disposal produces CGT to pay, you must file a standalone "Report and pay Capital Gains Tax on UK property" return and pay the tax within 60 days of completion. This is separate from, and earlier than, Self Assessment. If you are also in Self Assessment, you then report the same disposal again on your tax return and the 60-day payment is credited against the final bill.

The practical sequence is:

1. Note the completion date and count 60 calendar days forward.
2. Gather the purchase and sale figures, invoices for improvements, and the dates you occupied the property.
3. Work out the gain, reliefs and tax using a reasonable estimate of your income for the year.
4. File the return through the HMRC service at gov.uk/report-and-pay-your-capital-gains-tax and pay.
5. Repeat the entry on your Self Assessment return if you file one.

Late filing triggers penalties and late payment triggers interest, with further penalties as the delay lengthens.

To check your own deadline and see what the return needs, use the 60-day CGT reporting calculator, and read the detailed walkthrough in our guide to selling a second property and the 60-day rule.

Legitimate ways to reduce the tax

Searches for how to "avoid CGT on property" mostly land on a handful of rules that already exist in the legislation:

• Claim every allowable cost. Stamp duty, legal fees, agent fees and genuine improvements are frequently missed, and each pound deducted saves 18p or 24p.
• Use both partners' allowances. Spouses and civil partners transfer property between themselves at no gain, no loss, so a jointly held property uses two £3,000 allowances and two sets of bands.
• Timing across tax years. Two disposals in different tax years use two annual exempt amounts.
• Offset losses from shares or other property, including losses carried forward from earlier years.
• Pension contributions extend the basic rate band, which can shift part of a gain from 24% to 18%.
• PRR nominations matter if you genuinely have two residences.

What does not work: selling to a company you own at an undervalue, gifting to family and ignoring market value, or simply not reporting the sale — HMRC receives Land Registry and conveyancer data on property transactions.

What to do next

Work out the number first, then the deadline. Put your purchase and sale figures into the capital gains tax on property calculator to see the gain, the 18%/24% split and the tax due, then confirm your filing date with the 60-day reporting calculator. If the property has also produced rent, the rental income tax calculator will help you separate income-tax expenses from capital costs so nothing is claimed twice.