This article is for general information only and does not constitute tax advice.
When you sell a residential property in the UK that is not your main home, you must report the disposal to HMRC and pay any Capital Gains Tax (CGT) due within 60 days of completion. This applies to BTL properties, second homes, and inherited properties that you have let or not occupied as your principal residence.
The 60-day clock starts on the day of completion (not exchange). Missing the deadline results in a £100 penalty, with escalating penalties for longer delays.
CGT rates on residential property
For the 2025/26 tax year, CGT rates on residential property gains are:
| Taxpayer status | Rate |
|---|---|
| Basic-rate taxpayer | 18% |
| Higher-rate taxpayer | 24% |
The annual exempt amount (AEA) for 2025/26 is £3,000. The AEA was £6,000 in 2023/24 and £12,300 before that. The progressive reduction means CGT bites on smaller gains than it did a few years ago.
Calculating the gain
The chargeable gain is: sale proceeds minus purchase price minus allowable costs minus the annual exempt amount.
Allowable costs include: SDLT paid on purchase. Solicitor and conveyancer fees (purchase and sale). Estate agent fees on sale. Costs of capital improvements (new extension, new bathroom where none existed). These are costs you could not deduct against rental income as allowable expenses because they were capital in nature.
You cannot deduct mortgage interest, maintenance and repair costs (already deducted against rental income), or personal time.
Worked example
| Item | Amount |
|---|---|
| Sale price | £250,000 |
| Purchase price | £180,000 |
| SDLT on purchase | £6,500 |
| Legal fees (purchase) | £1,200 |
| Legal fees (sale) | £1,000 |
| Agent fees (sale, 1.5%) | £3,750 |
| Capital improvements | £8,000 |
| Allowable costs | £20,450 |
| Gain | £49,550 |
| Annual exempt amount | £3,000 |
| Taxable gain | £46,550 |
| CGT at 24% (higher-rate taxpayer) | £11,172 |
This CGT must be reported and paid within 60 days of the sale completing.
How to report
Use HMRC's "Report and pay Capital Gains Tax on UK property" service, accessible through your Government Gateway account on GOV.UK. The return is separate from your annual Self Assessment tax return, though you must also include the disposal on your next Self Assessment.
If you file your Self Assessment before the 60-day deadline, you do not need to file a separate property disposal return (though this rarely happens in practice given that Self Assessment is annual).
Penalties for late filing
A £100 fixed penalty if filed within 6 months after the 60-day deadline. Daily penalties of £10 per day (up to 90 days, maximum £900) if more than 6 months late. Further penalties of 5% of tax due if more than 6 months late, and an additional 5% if more than 12 months late.
Late payment of the CGT attracts interest from the day after the 60-day deadline.
Reliefs
Private residence relief (PRR): Eliminates CGT on a property that has been your only or main residence throughout ownership. Does not apply to BTL properties that you have never lived in.
Letting relief: Available only if you lived in the property as your home and also let it at some point. The relief is capped at the lower of PRR, £40,000, or the gain attributable to the letting period. For most BTL-only properties, letting relief is not available.
Losses: Capital losses from other asset disposals can be set against your property gain. If you sold shares at a loss in the same tax year, the loss reduces the taxable property gain.
Sources
- GOV.UK, "Report and pay Capital Gains Tax on UK property". https://www.gov.uk/report-and-pay-your-capital-gains-tax/if-you-sold-a-property-in-the-uk-on-or-after-6-april-2020 [Accessed 6 May 2026]
- GOV.UK, "Capital gains tax rates". https://www.gov.uk/capital-gains-tax/rates [Accessed 6 May 2026]