Capital gains tax on UK property is one of those areas where the numbers can catch people genuinely off guard. You sell a buy-to-let, pocket what feels like a healthy profit, and then realise a sizeable chunk of it needs to go to HMRC — sometimes within 60 days of completing the sale.

We work with a fair number of property investors and landlords across Greater Manchester and beyond, and the same questions come up time and again: what rate will I pay, does my main home count, can I reduce the bill, and what happens if I miss the deadline? This post answers all of those in plain English, using the figures that apply for the 2026/27 tax year.

One upfront caveat: CGT on property is highly dependent on your individual circumstances — your income tax band, what you’ve spent on the property, whether you’ve ever lived in it, and how it’s owned. What follows is a practical overview, not tailored advice. But it should give you a clear enough picture to have a more informed conversation with your accountant.

Capital gains tax is charged on the profit — not the proceeds — when you dispose of an asset that has gone up in value. For property, the most common triggers are selling a buy-to-let, disposing of a second home, transferring a property (other than to a spouse or civil partner), or gifting one.

The gain is broadly calculated as the sale price minus what you originally paid, minus allowable costs. Those deductible costs include your original purchase price, solicitor and surveyor fees on acquisition, estate agent fees and legal costs on sale, and any capital expenditure you’ve spent improving the property over the years — a loft conversion, a new extension, replacing a fitted kitchen. Routine repairs and maintenance do not count as capital improvements and cannot be deducted.

It’s worth being precise about what “improvement” means here. Replacing a boiler like-for-like is a repair. Adding a second bathroom where there wasn’t one is an improvement. HMRC draws that line quite specifically, and getting it wrong — in either direction — can affect your final gain materially.

You do not need to sell a property to trigger CGT. Transferring it to someone other than your spouse, giving it away, or receiving insurance proceeds on a property that’s been destroyed can all count as a disposal in HMRC’s view.

For the current tax year, residential property gains are taxed at 18% if you are a basic rate taxpayer and 24% if you are a higher or additional rate taxpayer. These rates are unchanged from 2025/26, which at least means there are no nasty surprises on that front.

Where you sit on that spectrum depends on your total taxable income in the year of disposal. If your income plus the gain pushes you across the basic rate threshold, part of the gain may be taxed at 18% and the remainder at 24%. It is not a flat rate applied to the whole gain — the calculation layers it on top of your other income.

Every individual also has an annual exempt amount — effectively a tax-free allowance for gains. For 2026/27 that stands at £3,000, which has been fixed at this level since 2024/25. It is considerably lower than the £12,300 allowance that applied a few years ago, so if you are comparing notes with someone who sold a property a while back, their experience will look quite different from yours.

Married couples and civil partners each have their own exempt amount and their own basic/higher rate thresholds. This is relevant because structuring property ownership jointly — where appropriate — can meaningfully reduce the combined CGT exposure. That is worth discussing with an accountant before you sell, not after.

If you are selling your main home, you will almost certainly not pay capital gains tax — provided you have genuinely lived in it as your only or main residence throughout the entire period of ownership and a few other conditions are met.

Those other conditions include: you have not let out part of the property, you have not used any part of it exclusively for business purposes, the grounds are smaller than 5,000 square metres, and you did not buy it primarily to make a gain. If all of that applies, Private Residence Relief covers the full gain and there is nothing to pay.

Where it gets more complicated — and where we regularly see confusion — is in situations that fall outside that clean scenario. If you lived in the property for some years and then let it out, or if you moved out and bought a second home, or if you own multiple properties, the relief becomes partial rather than full. HMRC calculates it proportionally based on the period you occupied it as your main home against the total ownership period.

Married couples and civil partners can only designate one property as their main home at any given time. If you own two properties, you can make a formal election to nominate which one gets the relief — but that election has to be made within two years of acquiring the second property. Miss that window and HMRC will decide for you based on the facts, which may not work in your favour.

This is the area where we see the most practical problems. Since April 2020, you have been required to report and pay any CGT owed on the disposal of a UK residential property within 60 days of the completion date. Not the end of the tax year. Not your next Self Assessment deadline. Sixty days from the day you complete.

If you normally submit a Self Assessment return, you will still need to report the disposal there as well — but the 60-day payment on account has to happen first, separately, via HMRC’s UK Property Reporting Service.

Missing the deadline triggers an automatic penalty, and interest accrues on unpaid tax from day 61. We have spoken to sellers who assumed they could deal with it at the January Self Assessment deadline and were surprised to find an unexpected penalty waiting for them. The 60-day clock starts ticking immediately on completion, which means you need to have your figures ready — or be working with someone who can pull them together quickly.

One nuance: if there is no tax to pay (because the gain falls within your annual exempt amount or Private Residence Relief applies in full), the 60-day reporting requirement does not apply in most cases. But if there is any doubt about whether tax is owed, it is safer to report and pay a provisional figure than to miss the window entirely.

CGT planning on property is not about aggressive schemes — it is mostly about making sure you are claiming everything you are genuinely entitled to, and timing things sensibly where possible.

A few approaches we discuss with clients regularly:

• Use your annual exempt amount. If you have a large gain and are planning to sell, consider whether part of the disposal could fall in a different tax year. The £3,000 exemption is modest, but it still reduces the taxable gain.
• Joint ownership. If a property is jointly owned, each owner’s exempt amount and tax rate applies to their share of the gain. Transfers to a spouse before sale are not normally a chargeable disposal, which can double the effective allowances available.
• Pension contributions. Making a pension contribution in the year you sell a property can extend your basic rate band, meaning a larger slice of the gain is taxed at 18% rather than 24%. The timing here matters.
• Claim all allowable costs. Keep records of every penny spent on improvements over the ownership period. Estate agent fees, solicitor fees, stamp duty on purchase — all of these reduce the gain. We regularly see clients underestimate these deductions simply because the records have not been kept.
• Capital losses. If you have made losses on other assets in the same tax year, these can be set against your property gain to reduce the taxable amount.

None of this replaces a proper conversation about your specific situation, particularly if the numbers involved are significant.