Capital Gains Tax on Property 2026 — Rates, Allowances & How It Works

What Is Capital Gains Tax on Property?

Capital Gains Tax (CGT) is charged by HMRC on the profit — the "gain" — you make when you dispose of an asset that has increased in value. For property owners, CGT most commonly arises when you sell, gift, or otherwise transfer a residential property that is not, or has not always been, your only or main home.

CGT is not charged on the full sale price. It is charged on the gain: broadly, the difference between what you paid for the property (your "base cost") and what you receive on disposal, after allowable deductions.

CGT Rates on Residential Property in 2026/27

Since the Autumn Budget of October 2024, the CGT rates applicable to gains on UK residential property are:

These rates apply to gains above the annual exempt amount. If a gain straddles the basic and higher rate bands — because adding it to your taxable income pushes part of it into the higher band — the portion falling in the basic rate band is taxed at 18% and the remainder at 24%.

Note that prior to 30 October 2024, the higher rate was 28%. It was reduced to 24% as part of the Budget changes. The basic rate of 18% was unchanged at that point.

The Annual Exempt Amount (AEA)

Every individual has an annual exempt amount — a portion of gains that is free from CGT in a given tax year. For 2026/27, the annual exempt amount is **£3,000**.

This is significantly lower than in previous years: it was £12,300 as recently as 2022/23, then reduced to £6,000 in 2023/24, and cut again to £3,000 for 2024/25 onwards.

You cannot carry unused annual exempt amount forward to future tax years. Planning disposals to make full use of the allowance — and your spouse or civil partner's allowance — can therefore meaningfully reduce your liability.

How the Gain Is Calculated

The basic calculation is:

**Gain = Disposal proceeds − Base cost − Allowable costs**

**Base cost** is typically what you paid for the property, including SDLT, legal fees, and survey costs at the time of purchase.

**Allowable costs** include:

• Legal fees and estate agent fees on disposal
• Capital improvement expenditure (e.g. an extension, not routine maintenance)
• Costs of enhancing the asset

You cannot deduct mortgage interest, general maintenance, or decorating costs.

A Worked Example

You bought a buy-to-let property in 2015 for £180,000 (including £3,000 purchase costs). You sell it in 2026 for £320,000. Estate agent and legal fees on sale total £6,000.

• Gain = £320,000 − £180,000 − £6,000 = **£134,000**
• Less annual exempt amount: £134,000 − £3,000 = **£131,000 taxable gain**
• As a higher rate taxpayer: £131,000 × 24% = **£31,440 CGT**

If part of the gain falls within your remaining basic rate band (determined by your income for the year), that portion would be taxed at 18% instead.

When CGT Does Not Apply

CGT does not apply to a property that qualifies fully as your main home under **Private Residence Relief (PRR)**. It also does not arise on property held inside a pension or ISA (though direct property is rarely held this way), or on disposals between spouses or civil partners living together.

Calculate Your Liability

Use our [Capital Gains Tax Calculator](/capital-gains-tax-calculator) to estimate how much CGT you may owe on a property disposal. Enter your purchase price, sale price, allowable costs, and income band to get an instant estimate.

Understanding your potential liability before exchange of contracts gives you time to consider reliefs, plan the timing of the disposal, and set aside funds for the 60-day reporting and payment deadline.