Tax Law

Capital Gains Tax on Property — What You Owe When You Sell (2025 Guide)

8 May 2025 ⏱ 7 min read 🇬🇧 England & Wales Last reviewed: May 2025

Capital Gains Tax on property catches thousands of UK sellers off guard every year — especially the 60-day reporting deadline that most people don't know exists. Whether you're selling a buy-to-let, a second home, or an inherited property, this guide explains exactly how CGT is calculated, what reliefs are available, and what you legally must do within 60 days of completion.

What Is Capital Gains Tax on Property?

Capital Gains Tax (CGT) is a tax on the profit you make when you sell — or otherwise dispose of — an asset that has increased in value. For property, CGT applies to the gain (the difference between what you paid and what you sell for, adjusted for allowable costs) rather than the full sale price. It is charged separately from Income Tax and has its own rates, rules, and reporting deadlines.

Not all property sales are subject to CGT. Your main home is usually exempt under Private Residence Relief. But second homes, buy-to-let properties, inherited properties, and commercial property are all potentially within scope — and with UK property values having risen sharply over recent decades, the gains — and the CGT bills — can be substantial.

Calculate your potential CGT bill instantly with our Capital Gains Tax Calculator.

CGT Rates on Property — 2024/25 and 2025/26

Following the Autumn Budget 2024, CGT rates on residential property were reduced from 18%/28% to 18%/24% from 30 October 2024. This was an unusual move — most Budget announcements tighten CGT rather than loosen it. The rates depend on whether your total taxable income (including the gain) falls within or above the basic rate Income Tax band:

Your Income Tax band	CGT rate on residential property	CGT rate on other assets
Basic rate (up to £50,270)	18%	18%
Higher/Additional rate (over £50,270)	24%	24%

Note: From 30 October 2024, the rates on non-property assets also changed — the old 10%/20% rates became 18%/24%, bringing them in line with residential property. The "carried interest" rate for fund managers changed separately.

Annual Exempt Amount (AEA): Every individual has an annual CGT exempt amount — gains up to this threshold are tax-free. From April 2023 the AEA was dramatically reduced from £12,300 to £6,000, and from April 2024 it was cut again to just £3,000. This reduction alone has brought many more property sellers into the CGT net.

How Is the Gain Calculated?

The taxable gain is not simply "sale price minus purchase price." Several adjustments are allowed that can significantly reduce your CGT bill:

Allowable Deductions

Purchase price (or market value at acquisition if inherited or gifted)
Acquisition costs — stamp duty paid on purchase, solicitor's fees, surveyor's fees
Improvement costs — capital expenditure that enhances the property (an extension, new kitchen, loft conversion). Note: routine repairs and maintenance are not allowable — these are revenue costs deductible against rental income, not against CGT
Disposal costs — estate agent's fees, solicitor's fees on sale, costs of advertising

Example Calculation

You bought a buy-to-let property in 2010 for £150,000. You paid £2,000 in stamp duty and £1,500 in solicitor's fees on purchase. In 2018 you spent £25,000 on a rear extension. You sell in 2025 for £320,000, paying £3,000 in estate agent fees and £1,500 in solicitor's fees on sale.

Sale price: £320,000
Less: purchase price (£150,000) + acquisition costs (£3,500) + improvement costs (£25,000) + disposal costs (£4,500) = £183,000
Gross gain: £137,000
Less annual exempt amount: £3,000
Taxable gain: £134,000
If you are a higher-rate taxpayer: 24% × £134,000 = £32,160 CGT

Use our CGT Calculator to run the numbers for your property, and our Rental Income Tax Calculator if you also receive rental income.

Private Residence Relief (PRR) — The Main Exemption

Private Residence Relief (PRR) exempts the gain made during periods when the property was your only or main residence. If you have lived in the property as your main home throughout the entire period of ownership, the entire gain is exempt — you pay no CGT at all.

The calculation becomes more complex when the property has not always been your main home — for example, if you let it out for some of the time, or if it was a second home you occasionally used. In these cases, the gain is apportioned: the fraction of the ownership period during which it was your main home (plus the final 9 months of ownership in all cases) is exempt, and the remainder is taxable.

Final Period Exemption

The final 9 months of ownership always qualify for PRR, regardless of whether you were living there — provided the property was your main home at some point. This means if you move out and then take up to 9 months to sell, the gain during that final period is still exempt.

Letting Relief

Letting Relief used to provide up to £40,000 of additional CGT relief for periods when a property that was your main home was let out. Since April 2020, Letting Relief is only available where the owner is in "shared occupancy" with the tenant — i.e. you live in the property at the same time as letting part of it. For most landlords who move out and then let the whole property, Letting Relief is no longer available.

The 60-Day Reporting and Payment Rule

One of the most important — and most frequently missed — CGT rules for property is the 60-day reporting deadline. Since October 2021, if you make a taxable gain on UK residential property, you must:

Report the gain to HMRC using the online "Report and pay Capital Gains Tax on UK property" service
Pay the estimated CGT due
Both within 60 days of the completion date of the sale

This is entirely separate from your Self Assessment tax return, which you must still complete if you are registered for Self Assessment. On the tax return you will reconcile the actual CGT with the payment already made. Missing the 60-day deadline attracts automatic late filing penalties starting at £100, plus daily penalties and interest on unpaid tax.

Common mistake: Many solicitors do not proactively remind you of the 60-day rule. Do not assume your solicitor has handled it — ask explicitly, or register with HMRC's property disposal service yourself.

Reducing Your CGT Bill — Legal Planning Strategies

Use Both Annual Exempt Amounts

If the property is jointly owned with a spouse or civil partner, each of you has a separate £3,000 AEA — giving a combined £6,000 exemption. Ensure the property is correctly registered in joint names before sale.

Time the Sale Across Two Tax Years

If you are close to completing a sale near 5 April (the end of the tax year), consider whether it is beneficial to complete before or after that date. Completing after 5 April gives you a fresh AEA for the new tax year and may change your Income Tax band if your income varies year to year.

Transfer to a Spouse Before Sale

Transfers between spouses and civil partners are exempt from CGT. If one spouse pays a lower rate of CGT than the other, transferring a share of the property before sale can reduce the overall bill. Seek advice before doing this — there are anti-avoidance rules.

Offset Capital Losses

If you have made a loss on another capital asset in the same or a previous tax year (stocks, a business, another property), you can offset it against your property gain. Capital losses must be reported to HMRC to be usable, even if the loss year produced no overall tax liability.

Principal Private Residence Election

If you own two or more properties that could each qualify as your main home, you can elect which one is treated as your main residence for CGT purposes. The election must be made within two years of acquiring the second property. Getting this election right can save a significant amount of tax.

Non-UK Residents — Different Rules Apply

Non-UK residents who sell UK residential property are subject to CGT under the Non-Resident CGT (NRCGT) regime. The reporting and payment deadline is the same 60 days. The base cost for NRCGT purposes is generally the April 2015 market value (not the original purchase price) unless the taxpayer chooses to use the original cost or straight-line time apportionment.

Frequently Asked Questions

Do I pay CGT when I sell my main home?+

No — in most cases. Private Residence Relief exempts the full gain if the property has always been your only or main residence. However, if you have let it out, had a home office used exclusively for business, or owned the grounds exceed half a hectare, PRR may be restricted and some CGT may be payable.

How long do I have to report and pay CGT after selling a property?+

60 days from the completion date. You must report online and pay the estimated CGT within 60 days — even if you have not yet filed your Self Assessment return. Missing this deadline results in automatic penalties starting at £100, plus interest on the unpaid tax.

Can I deduct the cost of repairs and maintenance?+

Not against CGT. Routine repairs and maintenance (redecorating, fixing a boiler, replacing like-for-like fixtures) are revenue costs deductible against rental income on your Self Assessment return — not capital expenditure deductible against CGT. Only capital improvements that enhance the property (an extension, a loft conversion, a new bathroom where none existed before) are allowable CGT deductions.

What if I inherited the property — do I pay CGT on the full gain from when it was originally purchased?+

No. When you inherit a property, your base cost for CGT is the market value at the date of death (the "probate value") — not the original purchase price paid by the deceased. You only pay CGT on the gain from that probate value to your sale price. This is called the "uplift on death." Note that Inheritance Tax (if applicable) is a separate charge on the estate — the two taxes can both apply, but on different amounts.