Capital gains tax on property is one of the taxes that surprises people most — not because the concept is complicated, but because the rules around reporting, deadlines, and reliefs are far more detailed than most people realise until it’s too late.

In 2024-25 alone, 163,000 taxpayers filed a CGT return on UK property, with total gains across residential disposals reaching £10.3 billion. That’s a lot of people navigating rules they hadn’t necessarily planned for. Whether you’re selling a buy-to-let, a second home, an inherited property, or a commercial asset you’ve held for years, understanding what you owe — and when — matters enormously.

The rates changed again from 6 April 2026, reliefs have been tightened, and the reporting deadline remains one of the most commonly missed obligations we see. This post sets out what you need to know, clearly, so you can make informed decisions rather than getting a nasty surprise after completion.

The gain isn’t the sale price — it’s the difference between what you sold the property for and what you paid for it, adjusted for certain costs. That adjustment is where most of the planning opportunity sits.

You can deduct the original purchase price, stamp duty land tax paid on acquisition, legal and surveying fees on both purchase and sale, and capital improvement costs — meaning structural or significant improvements, not maintenance or repairs. If you’ve extended the property, converted a loft, or added a new bathroom, those costs can legitimately reduce your gain. Repainting the walls or fixing a leaky roof cannot.

The annual exempt amount for 2026-27 is £3,000. That’s the portion of gains each individual can realise before CGT applies. It’s worth noting that this allowance was significantly higher in previous years — it was £12,300 as recently as 2022-23 — so if you’ve been planning around an assumption based on older figures, it’s worth revisiting your position.

For couples who jointly own a property, each partner gets their own exempt amount, which can be a useful tool when structuring a disposal — though the timing and ownership structure need to be right from the outset, not engineered at the point of sale.

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

• 18% for gains that fall within the basic rate band (taking into account your other income in the same tax year)
• 24% for gains above the basic rate band — so for higher and additional rate taxpayers, or where your gain pushes you into higher rate territory
• 24% for trustees and personal representatives

It’s worth being precise about how the basic rate calculation works. HMRC looks at your total taxable income first, fills the basic rate band with that income, and then stacks your gain on top. Only the portion of the gain that fits within the remaining basic rate band is taxed at 18% — everything else is taxed at 24%. So even if you’re a basic rate taxpayer by income alone, a large property gain can mean most of it is taxed at the higher rate.

Commercial property and other non-residential assets have different rates, which we haven’t focused on here. If you’re selling a commercial building or mixed-use property, the position is worth reviewing separately.

Business Asset Disposal Relief — relevant to certain qualifying business assets rather than investment property — attracts an 18% rate from April 2026. For most private landlords and property investors, this relief won’t apply, but it’s worth understanding what does and doesn’t qualify.

This is where we see the most genuine mistakes, and the consequences can include automatic penalties from HMRC.

Since April 2020, if you sell a UK residential property and there’s a CGT liability, you must report the gain and pay any tax due within 60 days of completion. This isn’t reported on your Self Assessment return instead — it’s a separate online return filed through HMRC’s Capital Gains Tax on UK property service, and the 60-day clock starts from the day of completion, not the day you get around to it.

Many people — particularly those who sell once and don’t have ongoing tax return experience — either don’t know this obligation exists or assume their solicitor will handle it. Solicitors handle the conveyancing; the tax return is your responsibility (or your accountant’s).

If you subsequently file a Self Assessment return for the same tax year, you’ll need to include the property disposal there too, but any tax paid under the 60-day return is credited against what’s owed. The two processes work together, but the 60-day deadline is the one that trips people up.

If you’re not sure whether CGT applies to a disposal you’ve recently made — or one that’s upcoming — this is exactly the kind of thing we help clients work through before completion, not after.

There are two main reliefs relevant to residential property disposals, and both have become more restrictive in recent years.

Principal private residence relief (PPR)

If the property has been your main home for some or all of the period you’ve owned it, PPR relief can reduce or eliminate the gain for those years of occupation. You also get an automatic final period exemption — currently the last 9 months of ownership — regardless of whether you were living there at the end.

PPR is particularly relevant for people who have lived in a property, moved out, and then sold it later — often after renting it for a period. The proportionate calculation can make a significant difference. But the conditions have been tightened, and what counted as a qualifying period of occupation has become stricter over successive budgets. If you’ve had any periods of absence, it’s worth working through the calculation carefully rather than assuming full relief applies.

Lettings relief

Lettings relief used to be a broadly useful relief for landlords who had previously lived in the property. Since April 2020, it’s only available where the owner is in shared occupancy with the tenant — which makes it relevant in far fewer cases. If you’re a landlord who moved out and rented to unrelated tenants, lettings relief is unlikely to help you under current rules.

Across the clients we work with, there are a handful of errors that come up repeatedly on property disposals.

• Missing the 60-day deadline. Already covered above, but it bears repeating — this is the single most common avoidable mistake, and the penalties for late filing compound quickly.
• Claiming costs that aren’t allowable. Maintenance and repairs are not capital improvements. Neither is mortgage interest, estate agent fees paid on an earlier failed sale, or furnishings. The list of what qualifies is more limited than people expect.
• Forgetting about inherited property. Inheriting a property and renting it out or selling it later does trigger CGT. The base cost for the calculation is typically the market value at the date of inheritance, not what the original owner paid — which can be helpful, but still requires proper reporting.
• Assuming no gain means no report. If you’ve made a loss or the gain is within the exempt amount, you may still need to report the disposal in certain circumstances. Not every situation requires a return, but it’s worth checking rather than assuming.

Getting proper advice before you exchange contracts — not after completion — gives you the most room to plan effectively.