When you sell a rental property, you pay Capital Gains Tax (CGT) on the profit. For residential property sold in 2025/26, the CGT rates are 18% for basic-rate taxpayers and 24% for higher and additional-rate taxpayers. You must report and pay the CGT within 60 days of completion.
CGT rates on residential property 2025/26
| Taxpayer status | CGT rate on residential property |
|---|---|
| Basic-rate taxpayer | 18% |
| Higher-rate taxpayer | 24% |
| Additional-rate taxpayer | 24% |
Note: If the capital gain pushes your total income into the higher-rate band, the portion of the gain falling within the basic-rate band is taxed at 18%, and the rest at 24%.
The annual CGT allowance
Each individual has an annual CGT exempt amount of £3,000 in 2025/26. This can be set against gains before tax is calculated. Couples who jointly own a property each have their own allowance (£6,000 combined).
How to calculate your gain
The taxable gain is broadly calculated as:
- Sale price
- Less: purchase price
- Less: buying costs (solicitor, stamp duty, survey)
- Less: selling costs (estate agent, solicitor)
- Less: enhancement expenditure (improvements, not repairs)
- Less: annual CGT allowance
- = Taxable gain
The 60-day reporting rule
Since October 2021, you must report and pay CGT on UK residential property within 60 days of completion. This applies even if you file Self Assessment. Failure to report within 60 days results in a penalty, even if you then include the gain correctly in your annual Self Assessment return.
You report through HMRC's "Report and Pay CGT on UK Property" service on GOV.UK. You will need your property's purchase and sale details, and the calculation of your gain.
The 60-day clock starts from the date of completion, not the date of exchange. Plan ahead, particularly if your sale is completing close to year-end or during a holiday period.
Principal Private Residence Relief
If the property was once your main home, you may be able to claim Principal Private Residence (PPR) Relief for the period you lived there, plus the final 9 months of ownership. Lettings Relief (previously available for properties that were once your main home) was largely removed in April 2020 except in cases of shared occupancy.
Reducing your CGT bill
- Maximise allowable costs (all buying, selling, and improvement costs)
- Transfer a share to your spouse or civil partner to use both annual allowances
- Time your sale to spread gains across tax years (if exchange and completion can straddle 5 April)
- Claim any available PPR Relief if the property was your main home
- Consider losses in the same tax year from other investments
This guide is for general information only. Property taxation is complex and frequently changes. Always consult a qualified tax adviser or accountant before making decisions. Find one via our accountant directory.