Capital Gains Tax on Property — The 2024 Budget Changes and What They Mean

Current CGT Rates on Residential Property

Following the October 2024 Autumn Budget, CGT rates on residential property are:

• **Basic rate taxpayers:** 18% (unchanged)
• **Higher and additional rate taxpayers:** 24% (increased from 28%)

These rates apply to gains on residential property that is not your main home (or was not for the entire period of ownership). The 24% rate came into effect from 30 October 2024.

The Shrinking Annual Exempt Amount

The annual exempt amount (AEA) — the slice of gains each individual can make each tax year free of CGT — has been cut dramatically:

For a landlord selling a buy-to-let property with a gain of £80,000, the £3,000 AEA offers only modest relief compared to the £12,300 available just two years earlier.

Private Residence Relief

Your main home — your principal private residence (PPR) — is generally exempt from CGT entirely under Private Residence Relief. If you have lived in the property as your main home throughout your ownership, there is no CGT on disposal.

Where you have not lived in the property for the entire ownership period (for example, you lived there, then let it, then sold it), PPR applies to the periods of occupation, plus a final 9-month period regardless of occupation. The remaining periods are potentially chargeable.

If you own more than one property, only one can be your PPR at a time. You can elect which property is your PPR; the election must be made within two years of acquiring the second property.

Letting Relief: Effectively Abolished for Most

Letting Relief used to provide up to £40,000 of CGT relief on properties that had been both your main home and let out. Following reforms in April 2020, Letting Relief only applies where the owner is in **shared occupancy** with the tenant — i.e., you live in the property at the same time as your tenants. For the vast majority of landlords this no longer applies.

Calculating Your Gain

The chargeable gain is broadly:

**Proceeds** minus **acquisition cost** minus **allowable costs**

Allowable costs include: the original purchase price (or probate value if inherited), Stamp Duty Land Tax paid on purchase, solicitor’s and surveyor’s fees on purchase and sale, estate agent’s fees on sale, and enhancement expenditure (capital improvements — not repairs or maintenance).

Transfers Between Spouses and Civil Partners

Transfers of assets between spouses or civil partners living together are made on a “no gain, no loss” basis for CGT. This means you can split ownership of an investment property with your spouse to use both annual exempt amounts and, where one partner is a basic rate taxpayer, benefit from the lower 18% rate on their portion of the gain.

The 60-Day Reporting and Payment Requirement

Since April 2020, CGT on UK residential property must be reported and paid to HMRC within **60 days of completion** of the sale. Reporting is done via the HMRC ‘Report and pay CGT on UK property’ online service. A penalty applies for late submission.

Implications for Buy-to-Let Portfolio Disposals

With annual exempt amounts slashed, CGT rates maintained (and raised for higher rate taxpayers), and Letting Relief effectively gone, the tax cost of unwinding a buy-to-let portfolio has increased substantially. Landlords considering selling should take advice on timing — spreading disposals across tax years to use multiple annual exempt amounts and using spouse exemptions where available.

Property Passport UK’s transaction history data provides a useful record of acquisition dates and, combined with your own records of improvement expenditure, helps you construct an accurate CGT calculation before instructing a disposal.