Capital gains tax on UK property is one of those areas where the stakes are high, the deadlines are tight, and the rules have been quietly shifting. In the 2024 to 2025 tax year alone, 163,000 taxpayers filed a CGT return on a residential property disposal — reporting £10.3 billion in gains and paying £2.2 billion in tax. That is not a niche problem. It affects landlords selling investment properties, people disposing of second homes, and anyone who has held property in a trust.

From our experience working with property investors and landlords, the biggest issue is not the tax itself — it is the pace at which you have to deal with it. Most people assume they can sort it out in their annual Self Assessment return, the same way they handle everything else. They cannot. There is a 60-day reporting deadline that applies the moment you complete a sale, and missing it means penalties and interest on top of the tax already owed.

Here is how the current rules work, where clients most often come unstuck, and what good planning actually looks like in practice.

Capital gains tax on UK property applies when you dispose of a residential property that is not, or has not always been, your main home. The most common situations we see are:

• Selling a buy-to-let or investment property
• Disposing of a second home or holiday let
• Transferring a property to a family member (yes, gifting a property is treated as a disposal at market value)
• Selling inherited property that has increased in value since the date of death

What you are taxed on is the gain — not the full sale price. You deduct what you originally paid (the acquisition cost), add any allowable improvement costs, and factor in purchase and sale expenses such as solicitor fees and estate agent commissions. The resulting figure is your chargeable gain.

From that, you subtract the annual exempt amount, which for the 2026 to 2027 tax year is £3,000. This has fallen sharply over recent years — it was £12,300 as recently as 2022/23 — so the number of people with a meaningful CGT liability has grown considerably. If you disposed of a property a few years ago and assumed the allowance would shield you, the current figure will come as a surprise.

From 6 April 2026, the rates that apply to residential property gains are:

• Basic rate taxpayers: 18% on gains that fall within the basic rate band
• Higher or additional rate taxpayers: 24% on gains above the basic rate threshold
• Trustees and personal representatives: 24%

A few things worth noting here. First, your CGT rate is determined by your total taxable income in the year of disposal — including the gain itself. This means a gain can push you from the basic rate band into the higher rate band, with some of the gain taxed at 18% and the rest at 24%. It is not always one rate or the other.

Second, these rates specifically apply to residential property. Different rates apply to other assets — shares, business assets — so if you have a mixed portfolio, the calculation becomes more nuanced.

Third, there is no longer a separate higher rate for residential property above the standard CGT rates, as there was in previous years. The gap between property and other assets has narrowed, but property still does not benefit from the lower rates available on some other asset classes. If you are trying to plan around which assets to dispose of first, that distinction matters.

This is the one that surprises almost everyone who has not dealt with a property disposal before. When you sell a residential property in the UK and you have a capital gains tax liability, you must report and pay the tax within 60 days of completion. Not 60 days from the end of the tax year. Not by the next 31 January Self Assessment deadline. Sixty days from the day you hand over the keys.

This rule has been in place since 2020, but it still catches people out — particularly those who have always handled their taxes through a straightforward annual return. The mechanics are also not especially simple: you need to set up a Capital Gains Tax on UK Property account through HMRC’s online service, calculate the gain and estimated tax owed, make a payment on account, and then reconcile everything in your Self Assessment return later.

Setting up the HMRC account can itself be a hurdle. We have seen clients run into identity verification issues, delays in receiving activation codes, and confusion about whether they need a separate Government Gateway account or can use their existing one. These are not insurmountable problems, but they take time — and time is the one thing you do not have when you are 40 days past completion and have not started.

Our strong recommendation: treat the 60-day clock as starting the moment you exchange contracts on a sale, not when you complete. Get the paperwork in order early.

CGT on property is not always inevitable at the headline rate. There are reliefs worth understanding — and in some cases, worth structuring around before a sale.

Private Residence Relief

If the property was your main home for the entire period you owned it, you will generally pay no CGT at all. Private Residence Relief (PRR) is one of the most valuable reliefs in the tax code. Where a property was your main home for part of your ownership period — say, you lived there for ten years and then let it out for five — a proportionate relief applies, plus you get the final nine months of ownership treated as exempt regardless.

Annual exempt amount

As noted above, the £3,000 annual exempt amount applies to everyone. If you are married or in a civil partnership, your spouse or partner also has their own exempt amount. Transferring a share of the property to a spouse before sale — provided you are genuinely transferring beneficial ownership and not just doing it on paper — can double the exemption available. This is legitimate planning that we help clients think through, but it needs to be done properly and before the disposal, not after.

Allowable costs

Do not underestimate how much your deductible costs can reduce a gain. A full record of purchase costs, legal fees, stamp duty paid on acquisition, genuine improvement works (not maintenance), and sale costs can meaningfully lower the taxable figure. Many clients underestimate what counts.

It is worth flagging that the broader tax reporting landscape for landlords is also changing. Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is being phased in, and landlords with rental income above certain thresholds will be required to keep digital records and submit quarterly updates to HMRC from April 2026 onwards for those earning above £50,000, with lower thresholds following in subsequent years.

This is separate from the 60-day CGT reporting obligation, but it affects the same group of people. If you are a landlord managing a portfolio, you will increasingly need proper digital bookkeeping in place — not just for compliance, but because accurate records are the foundation of an accurate CGT calculation when you come to sell.

We work with a number of property investors across Greater Manchester and beyond to get their bookkeeping in order, ensure their property accounts are MTD-ready, and make sure they are not caught off-guard when a disposal is on the horizon. Knowing your numbers year-round makes the 60-day window far less stressful. You can read more about Making Tax Digital in our separate guide.