Quick answer: Use our capital gains tax calculator to work out what you'll owe on a UK property sale — charged at 18% on gains within your basic rate band and 24% above it, after deducting your £3,000 annual exempt amount and any allowable costs. It applies to buy-to-lets, second homes and land, not the home you live in.
What is Capital Gains Tax on property?
Capital Gains Tax (CGT) is a tax on the profit you make when you sell a property that isn't your main home. It applies to buy-to-lets, second homes, and land — not to the sale of a home you've lived in throughout your ownership, which usually qualifies for full Private Residence Relief instead.
It's the gain that's taxed, not the sale price. If you sell a flat for £400,000 that you bought for £300,000, your gain before deductions is £100,000 — not £400,000.
How is Capital Gains Tax calculated?
You calculate CGT by taking your sale price, subtracting your purchase price and allowable costs, then deducting your annual exempt amount. What's left is your taxable gain, and it's taxed at 18% or 24% depending on your income.
In order:
- Start with your sale price
- Subtract your purchase price
- Subtract allowable costs (see below)
- Subtract the £3,000 annual exempt amount
- What remains is your taxable gain, taxed at 18% or 24%
Where the split between 18% and 24% falls depends on your income. Your taxable gain is added on top of your income for the year — any portion that stays within your basic rate band (up to £50,270 of total income) is taxed at 18%, and anything pushing above that is taxed at 24%.
Capital Gains Tax rates for property, 2026/27
For the 2026/27 tax year, property gains above the £3,000 annual exempt amount are taxed at 18% for basic rate taxpayers and 24% for higher rate taxpayers.
| Taxable gain on property, 2026/27 | Rate |
|---|---|
| Up to £3,000 | 0% |
| £3,001 – £50,270 (within basic rate band) | 18% |
| £50,271 and above | 24% |
These rates apply equally across the 2025/26 and 2026/27 tax years. The annual exempt amount is £3,000 per person, and it doesn't carry over — unused allowance is lost at the end of the tax year.
What costs can you deduct from your capital gain?
You can deduct several categories of cost from your gain before tax is calculated, provided they relate directly to buying, selling or improving the property.
- Stamp Duty Land Tax paid when you bought the property
- Estate agent or auctioneer fees paid to sell it
- Solicitor or conveyancing fees, both buying and selling
- Professional fees for surveys or valuations
- Capital improvements that add value — an extension, a loft conversion, a new kitchen — but not routine maintenance or decorating
Routine repairs and redecorating don't count. The distinction HMRC draws is between maintaining a property and improving it.
Reliefs and exemptions
Most CGT relief on property relates to how the property was used, not how it was financed.
- Private Residence Relief — full relief if the property was your only or main home throughout ownership; partial relief if it was for part of the time, including the final nine months of ownership under current rules
- Letting Relief — available in limited circumstances where you shared occupancy with a tenant in a home that already qualifies for some Private Residence Relief
- Annual exempt amount — £3,000 per person, applied before tax is calculated
- Limited company ownership — a property held through a limited company doesn't attract personal CGT on sale; the company pays Corporation Tax on the gain instead
If the property is jointly owned, each owner calculates and reports their own share of the gain and can use their own annual exempt amount.
A worked example
Say you bought a flat for £300,000 and sold it five years later for £420,000. You paid £6,000 in Stamp Duty on purchase, £8,000 in estate agent and solicitor fees on the sale, and spent £15,000 renovating the kitchen and bathroom.
Your gain works out as: £420,000 sale price, minus £300,000 purchase price, minus £29,000 in combined costs, minus the £3,000 annual exempt amount — leaving a taxable gain of £88,000.
If your income for the year is £45,000, you have £5,270 of basic rate band remaining before you hit the £50,270 threshold. So £5,270 of your gain is taxed at 18% (£949) and the remaining £82,730 at 24% (£19,855) — a total CGT bill of £20,804.
When and how to report and pay Capital Gains Tax
If CGT is due on a UK residential property sale, you must report and pay it within 60 days of completion, using HMRC's Capital Gains Tax on UK Property service — separately from your annual Self Assessment return.
Missing the 60-day window can trigger penalties and interest, so it's worth setting this up as soon as completion is confirmed rather than waiting for tax return season.
Frequently asked questions
Do I pay Capital Gains Tax when I sell my home?
Usually not, if it's been your only or main residence throughout ownership and you qualify for full Private Residence Relief. CGT can still apply if part of the property was let out, used for business, or if you have significant land or outbuildings beyond the standard permitted area.
Do I owe Capital Gains Tax on a second home?
Yes, on your share of the taxable gain above the annual exempt amount. If the property is jointly owned, each owner reports their own share and applies their own £3,000 allowance separately.
What happens if I make a loss on a property sale?
A loss can be offset against other capital gains in the same tax year, or carried forward to offset against future gains. It can't be offset against income.
Is Capital Gains Tax different for limited company buy-to-lets?
Yes. A property held through a limited company doesn't attract personal CGT — the company pays Corporation Tax on the gain instead, and rates and reliefs work differently.
Can I reduce my Capital Gains Tax bill?
Deducting every allowable cost, using your annual exempt amount, and — where relevant — claiming Private Residence or Letting Relief are the main legitimate ways to reduce the bill. Timing a sale to fall in a tax year where your income is lower can also reduce the rate applied to part of the gain.
Capital Gains Tax Calculator
Your estimated Capital Gains Tax
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Fill in the figures on the left and calculate to see your estimate.
This calculator is for illustrative purposes only and gives an indication of your potential Capital Gains Tax liability. Oakstead Finance is a mortgage and insurance broker — we don't give tax advice. Always confirm your position with a qualified accountant before you sell. If you're borrowing to fund your next purchase, our mortgage advisers can talk you through the deals that fit your circumstances.
