Capital Gains Tax (CGT)
Tax paid on the profit when you sell a property for more than you paid for it, after deducting allowable costs and reliefs.
Capital Gains Tax (CGT) is the tax you pay on the profit (gain) when you sell a property that is not your main residence. For BTL landlords, CGT is one of the largest costs associated with exiting an investment.
Current CGT Rates on Residential Property (2025/26)
- Basic rate taxpayers: 18%
- Higher/additional rate taxpayers: 24%
These rates are higher than CGT on other assets (10%/20%) because residential property has its own rate bands.
Annual Exempt Amount
Each individual has a CGT annual exempt amount of £3,000 (2025/26). Only gains above this threshold are taxed. For married couples/civil partners, each person has their own allowance — so transferring a share of the property before sale can double the exemption.
Allowable Deductions
You can reduce your taxable gain by deducting:
- Purchase costs (solicitor fees, SDLT on purchase)
- Selling costs (estate agent and solicitor fees)
- Capital improvements (extensions, new kitchen — but NOT repairs/maintenance)
Reporting and Payment
CGT on UK property must be reported to HMRC within 60 days of completion and an estimated payment made. This is via the "Report and pay Capital Gains Tax on UK property" service — separate from your self-assessment return.