Selling your only home usually costs nothing in Capital Gains Tax (CGT), but selling almost any other UK property can. This guide explains when the tax applies, how the gain is worked out, what relief may reduce it and how quickly it must be reported.
When does Capital Gains Tax apply to a property sale?
CGT is charged on the gain you make, not on the money you receive. According to GOV.UK, you may owe it when you sell or dispose of property that is not your main home, such as a buy-to-let, a second home, business premises, land or inherited property. It can also apply to your main home if you have let it out, used part of it exclusively for business, or if the grounds are very large.
The tax is on the profit between what the property counted as costing you and what it was sold for, not on the full sale price. Gifts to a spouse or civil partner, or to charity, are generally not taxed, according to GOV.UK.
How is the taxable gain worked out?
The broad steps, as GOV.UK sets them out for any asset, are to work out the gain on each asset (or your share if jointly owned), add the gains together, and deduct any allowable losses. When reporting a sale, HMRC expects you to have the purchase and sale prices, the dates you acquired and disposed of the property, the costs of buying, selling or improving it, and any reliefs you are claiming.
That list matters because it shows which numbers shape the result. Costs of buying, selling and improving the property feed into the calculation. The detailed rules on which costs qualify are in HMRC guidance, and records from the time of purchase are far easier to gather early than years later.
After the gain is known, an annual tax-free amount applies. GOV.UK’s rates page shows an annual exempt amount of £3,000 for the 2026 to 2027 tax year.
What rates apply for 2026 to 2027?
The GOV.UK rates page lists, for gains made on or after 6 April 2026, a rate of 18% on gains that fall within the basic rate band, which is £37,700 for 2026 to 2027, and 24% above it. Higher and additional rate taxpayers pay 24%.
The basic rate band is used up first by your taxable income, so a sale can push part of a gain into the higher rate even for someone whose income alone is below the higher rate threshold.
Worked example: a buy-to-let sale
The figures below are illustrative arithmetic, not a forecast.
| Step | Amount |
|---|---|
| Sale price | £320,000 |
| Purchase price | £200,000 |
| Allowable costs of buying, selling and improving | £8,000 |
| Gain | £112,000 |
| Less annual exempt amount | £3,000 |
| Taxable gain | £109,000 |
For a higher rate taxpayer at 24%, the bill would be £26,160 (109,000 × 0.24).
Now suppose another seller has only £20,000 of their basic rate band left after other income. The first £20,000 of the taxable gain is taxed at 18%, which is £3,600. The remaining £89,000 is taxed at 24%, which is £21,360. The total is £24,960.
Is a main home really free of tax?
Private Residence Relief is the reason most home sales are untouched. GOV.UK says you generally pay no CGT if all of these apply:
- the property was your only home and main residence for the whole of your ownership;
- you have not let out part of it (taking in a lodger does not count as letting);
- you have not used part of it exclusively for business (a temporary or occasional home office does not count);
- the grounds, including all buildings, are under 5,000 square metres, just over an acre;
- you did not buy it just to make a gain.
Married couples and civil partners can treat only one property as their main home at a time.
What happens if you did not live there the whole time?
HMRC’s Private Residence Relief helpsheet (for disposals between 6 April 2024 and 5 April 2025) describes how relief is apportioned when a home was not your main residence throughout. The gain is multiplied by the qualifying periods, divided by the total period of ownership. Qualifying periods include:
- the final 9 months of ownership, which always qualify provided the home was your main residence at some point (the final 36 months may apply to disabled people or care home residents in certain circumstances);
- absences for any reason totalling up to 3 years;
- absences totalling up to 4 years where work prevents you living at home or your employer requires you to work away;
- time working wholly outside the UK;
- up to 24 months before moving into a new home if you could not sell the old one or needed to refurbish or alter the new one.
Illustrative example: someone owns a home for 10 years, lives in it for 6, then lets it out for 4 before selling, and no other absence rule applies. The qualifying period is 6 years plus the final 9 months, which is 6.75 years. Dividing by 10 gives 67.5% of the gain relieved. On a £100,000 gain, £67,500 is exempt and £32,500 is chargeable, before the annual exempt amount.
The same helpsheet describes lettings relief as limited to cases where part of a home was let while another part remained the owner’s main residence. It is the lowest of the relief already calculated, £40,000 and the chargeable gain from the letting, and it does not apply if the whole dwelling was let at some point. Many landlords who let an entire property will therefore not qualify.
What is the deadline for reporting a UK property sale?
According to GOV.UK, for UK residential property completed on or after 27 October 2021 you must report and pay within 60 days of completion. For completions between 6 April 2020 and 26 October 2021 the limit was 30 days. Late reporting and payment can lead to interest and a penalty.
This sits on top of any Self Assessment duty. GOV.UK says people registered for Self Assessment must report gains where total sale proceeds were more than £50,000 for 2023 to 2024 onwards. Non-UK residents must report every sale of UK property or land, even if no tax is due.
The practical effect is that tax can fall due long before a Self Assessment return, so the money needs to be identified at completion. Sale proceeds and costs of moving are already competing for the same cash, as the full list of home-buying costs illustrates in reverse.
How does this shape the rent-or-sell decision?
CGT is one input into choices such as whether to keep a former home as a rental or sell it. Leaving a home empty or letting it for years changes how much of the gain is relieved, and a later sale of a let property may be taxed on most of its growth. That is separate from the question of what renting and buying cost over time, and from changes affecting landlords under the Renters’ Rights Act, which affect the running of a rental rather than the tax on a sale.
Because the maths depends on ownership dates, occupation history and income in the year of sale, readers with large gains or complicated histories often find a qualified tax adviser worth consulting.
Summary of the rules worth remembering
A main home is usually free of CGT if it was lived in throughout and not let or used exclusively for business. A second home, buy-to-let or part-let home may produce a chargeable gain, taxed after a £3,000 annual allowance at 18% or 24% for 2026 to 2027 depending on income. UK residential property sales generally need reporting and payment within 60 days of completion, so records of costs and occupation should be gathered before listing the property, not after.
This is general information, not personalised financial advice. Tax rules, rates and thresholds change; check current figures with GOV.UK.
Sources: GOV.UK; HM Revenue and Customs
