Capital gains tax on residential property in the UK is charged at 18% for basic rate taxpayers and 24% for higher and additional rate taxpayers. These rates are higher than CGT on other assets, which is charged at 10% and 20% respectively.
The most important exemption is private residence relief. If the property has been your main home throughout ownership, you pay zero CGT when you sell it. This relief is automatic and you do not need to claim it.
CGT only applies when you sell a property that is not your main home — typically a second home, buy-to-let investment, or inherited property. The annual exempt amount for 2025/26 is £3,000, which is deducted from your gain before tax is calculated.
To calculate your gain: take the sale price, subtract the original purchase price, subtract buying and selling costs (stamp duty, legal fees, estate agent fees) and subtract any capital improvements you made (extensions, renovations — but not repairs or maintenance).
For example, you bought a buy-to-let for £200,000 and sell it for £300,000. Your costs were £8,000. Your gain is £92,000. After the £3,000 annual exempt amount, your taxable gain is £89,000. If you are a higher rate taxpayer, the CGT is £21,360 (24% of £89,000).
You must report and pay CGT on UK residential property within 60 days of completion. This is done through the Capital Gains Tax on UK property service on GOV.UK. Late reports attract penalties.
Couples can transfer property between them without triggering CGT, which allows both partners to use their annual exempt amounts and potentially access lower tax rate bands.
Use our capital gains tax calculator to work out your exact liability.