Capital gains tax on property: what you pay and when

The part of your gain that falls inside your basic rate band is taxed at 18%, and everything above it at 24%, after you take off the £3,000 annual exempt amount. On a £50,000 gain with a £45,000 salary that is £10,964. You will not pay anything at all on the home you actually live in, and the deadline on anything else is tight: 60 days from completion, not from the tax year end.

What you pay, by gain

Because the gain sits on top of your income, the same gain costs different people different amounts. This is the tax due after the £3,000 annual exempt amount, for three salaries.

Capital gains tax on a property sale, 2026/27, one owner, after the £3,000 annual exempt amount. Every figure is produced by the same engine as the capital gains tax calculator, so the table cannot drift away from the tool.

Notice how little difference the salary makes at the top of the table and how much at the bottom. A large gain fills the basic rate band on its own, so almost all of it is taxed at 24% whatever you earn. A smaller gain is where your income decides the answer, because it determines how much room is left in the basic rate band for the gain to sit in.

The rates, and what changed

There used to be a separate, higher set of rates for residential property. There is not any more. From 30 October 2024 the rates on other assets rose from 10% and 20% to 18% and 24%, matching property, and residential property came down from 28% to 24% at the higher end.

This matters because a lot of what is written about property capital gains still describes the old world. If you are reading 28%, or a page that contrasts "residential rates" with "other assets", it was written before October 2024 and the figures are wrong for a sale today.

The annual exempt amount is £3,000 for 2026/27. It has fallen sharply: it was £12,300 in 2022/23 and £6,000 in 2023/24. If your sense of what is worth worrying about was formed a few years ago, it is out of date in the other direction.

Working out the gain

The method gov.uk sets out has five steps, and the order is what makes it work.

Work out your taxable income, which is your income minus your personal allowance. Work out your total gains. Take off the £3,000 allowance. Add what is left to your taxable income. Whatever then falls inside the basic rate band is taxed at 18%, and anything above it at 24%.

One trap worth flagging, because it is where these calculations usually go wrong. gov.uk works in taxable income against a basic rate band of £37,700. Most other explanations work in gross income against £50,270. Both are right and they give the same answer, because £12,570 plus £37,700 is £50,270. Mixing the two halfway through is how people end up with an answer that is out by thousands.

There is also a rule about where to use your allowance that is rarely mentioned and worth money: set it against the gains taxed at the highest rate. On a gain straddling both bands, the £3,000 is worth £720 used against the 24% slice and £540 against the 18% one.

What you can deduct

gov.uk's public page names estate agents' and solicitors' fees and improvement works, and stops. HMRC's own manual has the real list, it is closed, and it is longer than most people claim against.

You can deduct:

• the fees of a surveyor, valuer, auctioneer, accountant, agent or legal adviser
• the costs of transfer or conveyance, including the stamp duty you paid when you bought the property
• the cost of advertising to find a buyer
• the cost of any valuation needed to work out the gain itself
• money spent improving the property

The stamp duty one is worth pausing on. Buying a £300,000 second home costs £20,000 in stamp duty, and every penny of that comes off the gain when you eventually sell. People routinely forget it because they paid it years earlier and think of it as part of buying rather than part of the cost.

Mortgage interest is not on the list, and the list is closed. If you let the property, the interest is relieved against the letting, not against the gain, and not in the way most people picture: since April 2020 it is not deducted from rental income at all. It comes off your tax bill as a 20% reduction instead, which is worth less to a higher rate taxpayer than the old deduction was.

Repairs versus improvements is the other place people get it wrong, and the real test is not how big the job was. HMRC's test is whether the work is still reflected in the property at the moment you sell it. An extension is. A bathroom you added is. A boiler you fitted in 2015 and replaced in 2022 is not, because the first one is gone. Neither is redecorating, and neither is anything that has worn out or been ripped out since.

Selling your own home

Usually there is no tax at all. Private Residence Relief applies automatically, with no claim to make, if all five of these are true: it has been your only home and you lived in it throughout your ownership; you have not let part of it out, though a lodger does not count; you have not used part of it exclusively for business, though an occasional desk does not count; the grounds including all buildings are under 5,000 square metres, which is just over an acre; and you did not buy it in order to make a gain.

If one of those fails for part of the time, you do not lose the relief, you apportion it. The taxable slice is the proportion of your ownership not covered by relief.

The last 9 months always count, whatever you were doing with the property, as long as it was your only or main home at some point while you owned it. That is what stops a short overlap between buying and selling creating a bill.

Several other absences also count in full:

• up to the first 2 years while it was being built or renovated, or while you could not sell your old home
• absences for any reason at all, adding up to 3 years
• up to 4 years while you had to live elsewhere in the UK for work
• any period at all while you were working outside the UK

For all but the final 9 months you generally have to have lived in the home both before and after the absence, unless work was what prevented you.

If you own more than one home you can nominate which counts as your main one, but it has to be in writing, signed by all the owners, within two years of every change in the combination of homes you own. Married couples and civil partners only get one main home between them.

If you let part of it out

Letting Relief is narrower than its reputation. It only applies where you let part of the property while you were living in another part of it yourself. If you moved out and let the whole place, it does not apply at all, however long you lived there first.

Where it does apply, it is capped at the lowest of three things: the Private Residence Relief you received, £40,000, or the gain attributable to the letting. And it covers nothing for a period when the property was simply empty.

gov.uk's own example: you let a bedroom that is 10% of the house, the chargeable gain is £75,000, Private Residence Relief covers £67,500, the remaining £7,500 relates to the let room, and Letting Relief covers all £7,500, so there is nothing to pay.

Inherited property

This is the single most valuable thing on the page, because getting it wrong changes the bill by tens of thousands.

When you inherit a property, your cost for capital gains purposes is its market value at the date of death, the probate value. It is not what the person who died paid for it. So the gain on a house your parents bought for £30,000 in the 1970s, valued at £400,000 when they died and sold by you for £420,000, is £20,000 and not £390,000.

That also means the probate valuation matters twice over, and a low one is not automatically a win: it may reduce inheritance tax and increase the capital gains tax later. Inheritance tax itself, where there is any, is normally paid by the estate before anything reaches you.

If you sell at a loss you can claim it, and you have up to four years after the end of the tax year of the sale to do so. Losses come off gains in the same year first, then unused losses from earlier years, and anything left carries forward indefinitely.

Couples and two allowances

Transfers between spouses and civil partners who live together are treated as producing neither a gain nor a loss, so no tax arises on the transfer itself. What the transfer does not do is reset the clock: your partner takes on your original purchase price and your ownership history, and their eventual gain is measured from what you paid. Keep the paperwork.

Each person has their own £3,000 annual exempt amount, so a jointly owned property has £6,000 available against one sale. That is two individual allowances rather than a couple's allowance, which matters if only one of you owns the property.

The 60-day deadline

Sell a UK residential property at a gain and you have 60 days from completion to report it and pay, through HMRC's Capital Gains Tax on UK property account. The clock runs from completion, not exchange, which can be weeks apart.

Miss it and the penalties are fixed rather than proportionate: £100 immediately, then at six months a further penalty of £300 or 5% of the tax, whichever is higher, and the same again at twelve months. A reasonable excuse can excuse it if you then file without delay.

Two more things people miss. If you already file a Self Assessment return, the sale goes on that as well, not instead. And if you are not UK resident you must report every disposal of UK property within the same 60 days, even where there is no tax to pay or you made a loss.

To put your own numbers through it, the capital gains tax calculator works out the split across both bands. How capital gains tax works covers the general rules, and capital gains tax on shares covers the other asset most people hold. If you are buying rather than selling, the stamp duty calculator gives the figure you will later be able to deduct.

Common questions

How do you calculate capital gains tax on a property?

Take the sale price, subtract what you paid for it, then subtract your buying and selling costs and the cost of any improvements still there when you sell. Subtract the £3,000 annual exempt amount. Add what is left to your taxable income: the part that still sits inside the basic rate band is taxed at 18%, and anything above it at 24%. On a £50,000 gain with a £45,000 salary that comes to £10,964.

Is capital gains tax on property 20% or 24%?

Neither figure on its own. It is 18% on the part of the gain that falls inside your basic rate band and 24% on anything above it, so most property sales pay a mix of the two. If you are reading 28%, or a separate higher rate for residential property, that is out of date: residential and other assets have been taxed at the same rates since 30 October 2024.

What expenses can be deducted from capital gains tax?

More than most people claim. HMRC's list is closed, but it includes the fees of a surveyor, valuer, auctioneer, accountant, agent or legal adviser, the costs of transfer or conveyance including the stamp duty you paid when you bought, the cost of advertising to find a buyer, and improvement work. It does not include mortgage interest, which is not on the list, or ordinary maintenance and decorating.

What is the 6 year rule for capital gains tax?

It is an Australian rule, not a UK one, and there is no UK equivalent. It lets an Australian treat a former home as their main residence for up to six years after moving out. The UK rules that do the similar job are Private Residence Relief, the final nine months that always qualify, and the specific periods of absence gov.uk allows, such as up to four years working elsewhere in the UK and any period working abroad.

How much capital gains can you have without paying tax?

The annual exempt amount is £3,000 per person for 2026/27. A jointly owned property gives each owner their own, so a couple has £6,000 between them, though that is two individual allowances rather than one allowance for the couple. Gains are also completely free of tax if Private Residence Relief covers the whole period you owned the property.

When do I have to report and pay it?

Within 60 days of completion, through HMRC's Capital Gains Tax on UK property account, and the clock runs from completion rather than exchange. Miss it and there is an immediate £100 penalty, then a further penalty of £300 or 5% of the tax, whichever is higher, at six months, and again at twelve. If you file Self Assessment you must also put the sale on your return.

Do I pay capital gains tax when I sell my own home?

Usually not. Private Residence Relief covers it automatically if it has been your only home throughout, you have not let part of it out, you have not used part of it exclusively for business, the grounds are under 5,000 square metres, and you did not buy it to make a gain. If any of those is untrue for part of the time you owned it, some of the gain may be taxable.

Is this article financial advice?

No. It sets out the published 2026/27 rates, reliefs and deadlines and shows what they come to, with every figure worked by the same tested engine as our capital gains tax calculator. Property tax has more edge cases than most, so for a sale that matters, check your position with HMRC or a qualified adviser.

About this article

Written by the calcd team. We build UK money calculators and explain the numbers behind them in plain English. The rates, allowance and method come from gov.uk, the reliefs on your own home from gov.uk on selling your home, the deductible costs from HMRC's Capital Gains Manual, and the inherited-property rule from the same manual on assets acquired on a death. Every tax figure is worked at page load by the same tested engine as our capital gains tax calculator, which is locked to gov.uk's own published examples. Figures are estimates for the 2026/27 tax year, not financial advice. Last updated September 2026.