Capital Gains Tax on UK Property in 2026: The Complete Guide
Complete UK Capital Gains Tax guide for property in 2026: 18%/24% rates, the £3,000 AEA, PRR, Lettings Relief, 60-day reporting, worked examples and how to minimise CGT legally.
UK Capital Gains Tax on residential property was rewritten in October 2024 — the top rate was cut from 28% to 24% and the basic rate from 18% remained. Combined with the £3,000 annual exempt amount (down from £12,300 just two years prior) and the 60-day reporting window, the regime is more punitive than it looks at first glance. This guide covers everything UK property investors need in 2026: rates, reliefs, reporting, worked examples, and the legal levers to minimise what you owe.
The 2026/27 rates and allowances
- Residential rate (basic band): 18%
- Residential rate (higher / additional band): 24%
- Annual Exempt Amount: £3,000 (frozen)
- Reporting deadline (UK residents): 60 days from completion
- Late filing interest: base rate + 2.5% (~7.25% in 2026)
Note: non-residential and "carried interest" gains use different rates. This guide is residential only.
How CGT is actually calculated
- Sale price − base cost − allowable costs = raw gain
- Subtract reliefs (PRR, Lettings Relief if eligible)
- Subtract the £3,000 AEA
- Band-split the remainder: stack on top of your other income; the part falling in your remaining basic-rate band is taxed at 18%, the rest at 24%
Worked example — higher-rate landlord
Sale: £350,000. Bought 2014 for £220,000. Allowable costs (purchase SDLT + legal + capital improvements): £15,000. Other income: £60,000.
| Raw gain | £115,000 |
| Less AEA | −£3,000 |
| Taxable gain | £112,000 |
| Basic-band headroom (50,270 − 60,000) | £0 (already in higher) |
| Tax @ 24% × £112,000 | £26,880 |
| Net proceeds (£350k − £26,880) | £323,120 |
Worked example — basic-rate landlord
Same property but other income only £30,000.
| Raw gain | £115,000 |
| Less AEA | −£3,000 |
| Taxable gain | £112,000 |
| Basic-band headroom (50,270 − 30,000) | £20,270 |
| £20,270 × 18% | £3,649 |
| £91,730 × 24% | £22,015 |
| Total CGT | £25,664 |
Note how a similar gain still pushes the basic-rate seller into the 24% band for most of it.
The reliefs that actually move the answer
Principal Private Residence (PRR)
Exempts any period the property was your main residence, plus the final 9 months of ownership. For a property owned 15 years, occupied as a main residence for 5, the exempt fraction is (60 + 9) / 180 = 38.3% of the gain.
Lettings Relief
Severely restricted since April 2020 — now requires shared occupancy (you lived there at the same time as the tenant). Most landlords no longer qualify. If you do qualify, capped at £40,000 or the PRR amount, whichever is lower.
Spousal transfer pre-sale
Transferring a share to a lower-rate spouse pre-sale uses their AEA and band. Two AEAs vs one is worth £3,000 × your effective marginal rate (e.g. £720 at 24%). Stacking the gain into the spouse's remaining basic band can save another 6pp on that slice.
The optimal exit year
Holding for capital growth has to overcome the CGT haircut on disposal. Use our CGT + Optimal Sale Year calculator to model every future year and find the year with the highest net proceeds. The Full BTL Investment Model adds the cash-flow side to identify the year of peak annualised total return.
60-day reporting — don't miss this
UK residents must report and pay residential CGT within 60 days of completion via the HMRC online CGT-on-property service. Late-filing interest is currently around 7.25% annualised; a £100 fixed penalty kicks in at 30 days late; further penalties at 6 and 12 months. Non-UK residents must report every residential disposal — even no-gain ones — within 60 days.
