Capital Gains Tax on Property in 2026/27: A Guide for Landlords and Second-Home Owners

Sell a buy-to-let, a second home or a property you have never lived in, and there is a good chance Capital Gains Tax is due — and that you have just 60 days to report it and pay. Get the timing wrong and HMRC charges penalties and interest on a bill you were always going to pay anyway.

Here is how CGT on residential property works in the 2026/27 tax year, what you can deduct, and where landlords most often trip up.

When Capital Gains Tax applies

CGT is charged on the gain — not the sale price — when you dispose of a property that has not been your only or main residence throughout your ownership. In practice that means buy-to-lets, second homes and holiday properties, inherited property you did not live in, and property gifted to anyone other than your spouse or civil partner. A gift counts as a disposal at market value, even though no money changes hands.

If the property has been your only or main home throughout, Private Residence Relief normally removes the gain entirely and there is nothing to report.

Rates and allowance for 2026/27

The annual exempt amount is £3,000. Gains above that are taxed at 18% where they fall within your basic rate income tax band and 24% on the part that falls above it. Those unified rates have applied to residential property and other assets alike since the October 2024 Budget.

The calculation stacks the gain on top of your income for the year, so a landlord with modest earnings may pay 18% on part of a gain and 24% on the rest. If you own the property jointly, each owner has their own £3,000 allowance and their own band to use.

Working out the gain

Start with the sale proceeds and deduct:

• the original purchase price;
• Stamp Duty Land Tax paid on acquisition;
• legal fees, survey fees and agents' commission on both purchase and sale;
• capital improvements — an extension, a new kitchen where none existed, a loft conversion, double glazing replacing single.

You cannot deduct routine repairs, redecoration or maintenance; those are revenue costs you should already have claimed against rental profits. The distinction between an improvement and a repair is where most disputes arise, so keep invoices for anything structural. You can also carry forward allowable capital losses from earlier years, provided they were reported to HMRC.

Private Residence Relief and the final nine months

If a property was your main home for part of your ownership, that period is relieved proportionately — and the final nine months of ownership are treated as qualifying regardless of whether you lived there, which helps anyone who moved out before selling. Accidental landlords who let a former home for several years often find a meaningful slice of the gain is covered.

The 60-day reporting rule

Where CGT is due on a UK residential property disposal, you must file a UK Property Disposal return and pay the estimated tax within 60 days of completion — completion, not exchange. You do this through an HMRC Capital Gains Tax on UK Property account, which is separate from your Self Assessment. The payment is an estimate credited against your final liability when you file your annual return.

You do not need a 60-day return where no CGT is due — for example a fully relieved main residence, or a gain inside the annual exempt amount. But the default assumption on any let property should be that the clock is running from the day the keys change hands.

Planning points worth knowing

• Transfers between spouses and civil partners are made on a no gain/no loss basis, which can bring a second allowance and a lower tax band into play before a sale. Do it properly and well before marketing.
• Timing across tax years — completing on 6 April rather than 5 April moves the liability into the following year and defers the payment date, and may allow a fresh allowance to be used.
• Offsetting losses — disposing of an asset standing at a loss in the same tax year reduces the chargeable gain.
• Records — keep completion statements, SDLT returns and improvement invoices for the whole period of ownership, not the usual six years.

Where landlords get caught out

The three recurring problems are: assuming CGT is only payable when the Self Assessment return is filed the following January; treating a full refurbishment as deductible when much of it was repair work; and forgetting that a gift or a transfer into a limited company is a disposal at market value with tax to pay and no cash received to pay it with.

This is general information rather than tax advice — figures depend on your own income and circumstances, so confirm your position with a qualified tax adviser before you commit to a sale. If you are weighing up whether to sell or hold, book a free valuation with Giles Real Estates so you are working from a realistic figure.