Capital Gains Tax on a Second Home in the UK: 2026 Rates and Calculation

What CGT on residential property is

Capital Gains Tax (CGT) is the tax you pay on the profit when you sell an asset for more than you paid for it. For UK residential property that is not your main home, CGT applies at a higher rate than for other assets. It applies to second homes, holiday homes, buy-to-let properties, inherited property, and any other residential property that does not qualify for Private Residence Relief.

If you are selling your main home and have lived in it continuously, Private Residence Relief usually means you pay no CGT at all. The complications start when the property has not been your main home for the full period of ownership, or when it is a different property altogether.

2026 rates

For UK residential property gains in the 2025 to 2026 tax year:

The 24% rate was reduced from 28% in April 2024 by the previous government, and was confirmed at 24% by the current government. Future budgets may revise these rates.

The CGT residential property rates are higher than the rates for other assets (which are 10% basic and 20% higher).

Annual allowance

Every individual has an annual CGT exempt amount, currently £3,000 for the 2025 to 2026 tax year. The first £3,000 of gains in any tax year is tax-free. Above that, CGT applies.

The allowance has been progressively reduced from £12,300 in 2022 to 2023, to £6,000 in 2023 to 2024, to £3,000 in 2024 to 2025 onwards. This means more sellers fall into the CGT net than a few years ago.

Married couples each have their own allowance. Joint owners can use both allowances if the property is held in joint names.

How to calculate the gain

The gain is the sale price minus the original purchase cost minus allowable deductions:

1. Sale price: the agreed sale price minus any selling costs (estate agent fees, conveyancing fees)

2. Original cost: the purchase price plus stamp duty paid on purchase plus original conveyancing fees and survey costs

3. Allowable deductions: the cost of capital improvements during ownership (extensions, new kitchen if it adds value, conservatory, loft conversion). Routine maintenance and repairs do not count.

Worked example:

• Bought in 2010 for £200,000
• Stamp duty and fees: £4,000
• Loft conversion in 2018: £30,000
• Sold in 2026 for £400,000
• Selling costs: £8,000
• Net sale proceeds: £400,000 - £8,000 = £392,000
• Total cost basis: £200,000 + £4,000 + £30,000 = £234,000
• Gain: £392,000 - £234,000 = £158,000
• Less annual allowance: £158,000 - £3,000 = £155,000 taxable
• Higher rate CGT: £155,000 x 24% = £37,200 due to HMRC

Letting Relief and Private Residence Relief overlap

If a property was your main home for part of the period and let or empty for another part, Private Residence Relief reduces the gain proportionally for the period it was your main home. Letting Relief is a separate, more limited relief that can apply to certain periods of letting, but it was significantly restricted from April 2020 and now only applies in narrow circumstances. See the Private residence relief explained guide.

The 60 day reporting window

Since April 2020, UK residents must report and pay CGT on residential property gains within 60 days of completion (originally 30 days, increased to 60 in October 2021). Non-residents must also report within 60 days regardless of whether tax is due.

The reporting is done through HMRC's online Capital Gains Tax on UK Property service. You will need:

• A Government Gateway account
• The property details
• The sale and purchase figures
• Allowable deductions

Penalties apply for late reporting, even if no tax is due. Interest also accrues on late payment.

Common reliefs and exemptions

1. Private Residence Relief: full or partial exemption for periods the property was your main home

2. Spousal transfer: transfers between spouses are at no gain no loss (no CGT)

3. Gifts to charity: full exemption

4. Qualifying enterprise investment schemes: deferral relief if proceeds are reinvested in EIS

How to get the facts you need

To calculate your gain accurately, you need the original purchase price (which you should have on file), the date of purchase, and the sale price. For older inherited properties or gifted property, the relevant value is the market value on the date you acquired it.

Property Passport UK shows the full HM Land Registry sold price history for every property in England and Wales, going back to 1995. If you bought before 1995 (or inherited a property and need to estimate its value at acquisition), search the address on Property Passport UK at [/search](/search) and use comparable nearby sales as evidence of value. You will likely need a formal valuation for HMRC purposes, but Property Passport UK is a useful starting point.

Look up the property data behind your tax decisions

Property Passport UK shows verified data for every one of the 19.35 million properties in England and Wales: tenure, EPC, sold prices, flood risk, listed status. Use it to research before you buy a second home, plan a sale, or work out a tax position. Search any address at [/search](/search). Every fact comes from an official UK government source.

Related guides

• Stamp duty second home explained
• CGT on second home UK
• Private residence relief explained
• Inheritance tax on property