Selling a property in the UK can trigger Capital Gains Tax (CGT), and with ongoing rule changes and tighter reporting requirements, understanding how it works in 2026 is more important than ever.

What is Capital Gains Tax?

CGT is charged on the profit (gain) you make when you sell a property that is not your main home. This typically applies to:

• Buy-to-let properties
• Second homes
• Inherited properties (if sold later at a gain)

Your gain is the difference between what you paid for the property and what you sell it for, after allowable deductions.

Current CGT Rates (2026)

For residential property:

• Basic rate taxpayers: 18%
• Higher/additional rate taxpayers: 24%

Your rate depends on your total taxable income in the year of sale.

Your CGT Allowance

Each individual has an annual CGT allowance (currently £3,000). This means:

• Only gains above £3,000 are taxed
• Couples can potentially use £6,000 if jointly owned

What Costs Can You Deduct?

You don’t pay tax on the full sale price — only the gain after costs such as:

• Purchase price
• Stamp Duty and legal fees
• Estate agent fees
• Capital improvements (e.g. extensions, new kitchen)

Note: General repairs and maintenance are not deductible for CGT.

What About Your Main Residence?

If the property was your main home, you may qualify for Private Residence Relief (PRR), which can significantly reduce or eliminate CGT.

Even if you rented it out later, you may still get partial relief depending on how long you lived there.

Key Rule: 60-Day Reporting

In 2026, you must report and pay any CGT on UK residential property within 60 days of completion.

Missing this deadline can result in penalties and interest — even if you plan to declare it later on your Self Assessment.

Planning Opportunities

There are ways to reduce your CGT liability:

• Transfer ownership between spouses before sale to use both allowances
• Time the sale across tax years where possible
• Offset losses from other assets
• Keep detailed records of all improvement costs

Final Thoughts

CGT on property is not always straightforward, especially if the property has changed use over time or is jointly owned.

Getting advice early can help you plan properly, avoid penalties, and potentially save thousands in tax.

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Need help calculating your CGT or planning a sale?
We specialise in property tax and can guide you through the process from start to finish.

📞 Call: 0161 710 1901
📧 Email: Tax@TaxesDoneRight.co.uk
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