Information GuideCapital Gains Tax (CGT) for Landlords
Plain-English guide to CGT on rental properties: when it applies, rates, allowances, key reliefs, 60-day reporting, and records. Information only; not tax/legal advice. England & Wales. Current as at September 2026.
What CGT Is (for Landlords)
Understanding the fundamentals of Capital Gains Tax for rental property owners
Tax on Profit
CGT is tax on the profit ("gain") when you sell or gift a property that is not fully your main home.
Gain Calculation
The gain is selling price minus buying price and certain allowable costs.
Annual Exempt Amount
Your Annual Exempt Amount (AEA) reduces the taxable gain — currently £3,000 per individual per tax year.
When CGT Applies
Property Disposals
Applies on disposals of UK residential property not fully covered by Private Residence Relief (PRR).
Company vs Individual
Companies pay corporation tax on gains, not CGT.
Gifts and Transfers
Gifts to spouse/civil partner are usually no gain/no loss; other gifts can be chargeable.
Important Note
CGT rules are complex and can vary based on your specific circumstances. This information is for guidance only.
Always consult with a qualified tax adviser for your specific situation.
Confirmed — April 2027
New separate income tax rates on rental income take effect: 22% basic, 42% higher, 47% additional rate. This is an income tax change, not a CGT change — but it directly affects landlords' disposal timing decisions. Source: GOV.UK.
Rates and Allowance (Current Outline)
Current CGT rates and annual exempt amounts for residential property — 2026/27 tax year
Basic Rate Band
Residential gains within the basic-rate income tax band
Higher Rate
Residential gains above the basic-rate income tax band
Annual Exempt Amount
Tax-free allowance for individuals per tax year
Allowable Costs (Typical)
Understanding what costs you can deduct when calculating your CGT liability
Purchase Costs
Costs incurred when buying the property
- SDLT (Stamp Duty Land Tax)
- Legal and conveyancing fees
- Survey and valuation costs
- Lender arrangement fees
Sale Costs
Costs incurred when selling the property
- Estate agent fees and commission
- Legal and conveyancing fees
- Marketing and advertising costs
- Energy Performance Certificate
Capital Improvements
Enhancements that add value or extend life
- Extensions and conversions
- New kitchen or bathroom installations
- Central heating systems
- Double glazing installation
PRR and Lettings Relief (Overview)
Understanding Private Residence Relief and the limited scope of Lettings Relief
Private Residence Relief (PRR)
PRR can reduce CGT for periods you lived there as your main home and certain deemed periods.
Key Points
- Must be your main residence
- Includes certain deemed occupation periods
- Final 9 months always qualify
- Evidence of occupation is crucial
Lettings Relief
Lettings Relief is now very limited: generally only where you shared occupancy with a tenant.
Key Points
- Limited to shared occupancy situations
- Must have lived in property as main home
- Maximum relief significantly reduced
- Most buy-to-let properties do not qualify
60-Day Reporting for UK Residential Property
Understanding the critical 60-day deadline for CGT reporting and payment
Days to Report
If CGT is due on a UK residential sale, report and pay within 60 days of completion.
Calculate First
Compute gain → estimate tax → create HMRC CGT account → submit and pay via the UK Property Reporting Service.
Self Assessment
Still include the disposal on your Self Assessment return for the tax year.
Mini Checklist for 60-Day Reporting
- 1Compute the gain
Calculate sale price minus purchase price and allowable costs. - 2Estimate tax liability
Apply reliefs, AEA, and appropriate tax rates to your gain. - 3Create HMRC account
Set up your CGT online account with HMRC if not already registered. - 4Submit and pay
Complete the return and make payment within 60 days of completion.
CGT Calculation Example
A worked example to illustrate how CGT might be calculated on a rental property sale
Property Details
| Purchase price | £200,000 |
| Purchase costs | £5,000 |
| Sale price | £280,000 |
| Selling costs | £4,000 |
| Improvements | £10,000 |
Gain Calculation
| Sale proceeds | £280,000 |
| Less: Purchase price | £200,000 |
| Less: Purchase costs | £5,000 |
| Less: Selling costs | £4,000 |
| Less: Improvements | £10,000 |
| Gain | £61,000 |
| Less: AEA | £3,000 |
| Taxable gain | £58,000 |
Rate depends on your income bands and available reliefs. Use HMRC's CGT rate guide to estimate your liability.
Work your own figures: our capital gains tax computation tool takes the base cost, the improvements and the costs of disposal and produces the computation and the journal, in Excel and PDF.
Jargon Buster — Quick Terms (Plain English)
Understanding key CGT terminology in simple language
Capital Gains Tax
Tax on profit from selling or gifting assets like rental property.
Private Residence Relief
Relief for your main home periods; reduces or removes CGT on those periods.
Lettings Relief
Small relief now limited to shared occupancy situations with a tenant.
Annual Exempt Amount
Tax-free slice of gains each tax year — £3,000 for individuals in 2026/27.
Completion
Legal transfer date; starts the 60-day reporting clock if CGT is due.
Stamp Duty Land Tax
Tax paid on property purchase — an allowable cost for CGT base cost calculation.
Frequently Asked Questions
Common questions about CGT for rental properties
Do I always owe CGT on a rental sale?
Not always. PRR, AEA, losses, and improvement costs may reduce or remove the gain. Each situation is different, so it is important to calculate your specific position with your tax adviser.
Do I need to file within 60 days if there is no CGT to pay?
If no CGT is due, a 60-day report is not required. Keep full records and include the disposal in Self Assessment if applicable. However, maintain detailed records to demonstrate no tax is due.
Can I use capital losses from previous years?
Yes. Brought-forward capital losses can offset gains after using the AEA. Keep proper documentation of previous losses and confirm they have not already been used.
What records should I keep?
All purchase and sale documentation, receipts for improvements and allowable costs, evidence of occupation periods for PRR claims, and any letting arrangements. Keep records for at least 5 years after the disposal.
How to Get Started (Simple Steps)
A straightforward approach to managing your CGT obligations
Gather Your Records
Collect dates, prices, and evidence including purchase and sale costs and improvements documentation.
Calculate the Gain
Draft the gain calculation and check PRR and Lettings Relief eligibility for your circumstances.
Apply Reliefs and Allowances
Consider losses and the AEA; confirm if 60-day reporting applies to your situation.
Get Professional Support
Use our enquiry form to get information and guidance on your specific circumstances.
For records that support your CGT calculation, see our landlord bookkeeping service or 1-to-1 training. If you are in scope for Making Tax Digital, your disposal records are part of your digital recordkeeping requirement. Capital allowances previously claimed can affect your CGT base cost on disposal — see our capital allowances guide.
Get Information and Guidance
Complete the enquiry form for detailed information about your CGT position
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