What is capital gains tax on buy to let property?
Capital gains tax on buy to let property is charged when you sell or give away a rental property for more than it cost you. In the 2026/27 tax year the rates are 18% and 24%, each owner has a £3,000 tax-free allowance, and most UK residents must report and pay within 60 days of completion. This guide is for landlords deciding when and how to sell.
CGT is charged on the gain, not on the sale price. The same rules and rates apply in England, Scotland, Wales and Northern Ireland (GOV.UK: Tax when you sell property). For a quick estimate, use our free CGT calculator.
How much CGT will I pay on a buy-to-let in 2026/27?
| 2026/27 | Figure |
|---|---|
| Annual exempt amount (each individual) | £3,000 |
| Rate on the part of the gain within your unused basic-rate band | 18% |
| Rate on the rest of the gain | 24% |
CGT rates are now aligned across all assets. Since 30 October 2024, the same 18% and 24% rates apply whether you sell a buy-to-let, shares or most other assets (GOV.UK: CGT rates and allowances).
To find your rate, take your taxable gain after the £3,000 allowance and add it to your taxable income for the year. Any part that fits within your unused basic-rate band (£37,700 above the personal allowance in 2026/27) is taxed at 18%; the rest is taxed at 24% (GOV.UK: CGT rates; GOV.UK: Income Tax rates).
This means a gain can force you into paying 24%, depending on how large it is. Even if you are normally a basic-rate taxpayer, any part of a large gain that does not fit in your remaining basic-rate band is taxed at 24%.
The allowance cannot be carried forward. If you do not use it in a tax year, it is lost.
What has changed and when
Key changes to capital gains tax on residential property, with the date each took effect (sources: GOV.UK rates and allowances; GOV.UK reporting).
| Date | Change |
|---|---|
| 6 April 2020 | 30-day reporting and payment introduced for UK residential property; Private Residence Relief final period cut to 9 months; lettings relief limited to shared occupancy |
| 27 October 2021 | Reporting and payment deadline extended from 30 to 60 days after completion |
| 6 April 2023 | Annual exempt amount cut to £6,000 |
| 6 April 2024 | Annual exempt amount cut to £3,000; higher rate on residential property cut from 28% to 24% |
| 30 October 2024 | Rates on most other assets raised to 18% and 24%, so all assets now use the same rates |
| 28 October 2026 | Autumn Budget: this page will be reviewed afterwards |
How do I work out the gain when selling a buy-to-let?
Gain = sale price − purchase price − allowable costs (GOV.UK: Work out your gain).
| You can usually deduct | You cannot deduct |
|---|---|
| Stamp Duty Land Tax, solicitor and survey fees when you bought | Mortgage interest and the costs of arranging a mortgage (HMRC CG15284) |
| Estate agent and solicitor fees when you sell (HMRC CG15250) | Repairs, redecorating and like-for-like replacements, which belong against rental income instead |
| Improvements that add value and are still there when you sell, such as an extension | Any cost that is allowable against your rental income |
Paying off the mortgage when you sell does not reduce the gain. The mortgage affects how much cash you receive, not the tax. More detail: what you can deduct from capital gains tax on property.
Repairs or improvements? Do not lose the costs between two tax returns
Repairs, like-for-like replacements of part of the property and redecorating are deducted from your rental income in the year you pay for them (HMRC BIM46901). Some refurbishment work is not a repair. Improvements, alterations, replacing a whole asset, and work to make a run-down property usable when you bought it are capital costs. A capital cost cannot be deducted from your rent, but it can be added to the cost of the property and so reduce your gain when you sell, provided it is still reflected in the property at the time of sale (HMRC CG15180).
Each cost can only be used once. A genuine repair that was allowable against rental income cannot be moved into the CGT calculation instead, even if it was never claimed (TCGA 1992 s.39). If a repair was missed, the fix is to correct the earlier tax return, within its time limits.
The real risk is poor communication between landlord and accountant: refurbishment costs can be left out of both the rental figures and the CGT calculation, so too much tax is paid. Keep invoices that show what work was done, and give them to your accountant each year and again when you sell.
Worked example: a higher-rate landlord selling a buy-to-let
Assumptions: sole owner, UK resident, salary already uses all of the basic-rate band, no other gains or losses in 2026/27, never lived in the property.
| Sale price | £280,000 |
| Less selling costs (agent and solicitor) | (£4,000) |
| Less purchase price (2012) | (£150,000) |
| Less buying costs (SDLT, solicitor, survey) | (£4,000) |
| Less extension | (£20,000) |
| Gain | £102,000 |
| Less annual exempt amount | (£3,000) |
| Taxable gain | £99,000 |
| CGT at 24% | £23,760, reported and paid within 60 days of completion |
The same sale, owned jointly 50:50 with a spouse
Assumptions: the spouse has £20,000 of taxable income, which leaves £17,700 of basic-rate band. Each owner’s gain is £51,000, or £48,000 after their own £3,000 allowance.
- Higher-rate spouse: £48,000 × 24% = £11,520
- Other spouse: £17,700 × 18% = £3,186, plus £30,300 × 24% = £7,272, a total of £10,458
- Combined: £21,978, which is £1,782 less than sole ownership
Transfers between spouses or civil partners who live together are treated as no gain and no loss (HMRC CG22200). The transfer must be a genuine change of ownership, and it can have Stamp Duty and mortgage consequences, so get advice before changing ownership.
When must I report and pay CGT after selling?
Not UK resident? You must report even if you made no profit.
Non-residents must report every sale or disposal of UK property or land to HMRC within 60 days of completion, even if there is no tax to pay or you made a loss (GOV.UK: CGT for non-residents). See UK property CGT for non-residents.
Who must report, and by when?
| Who | What to do | Deadline |
|---|---|---|
| UK resident selling UK residential property with CGT to pay | Report and pay using HMRC’s “Report and pay Capital Gains Tax on UK property” service | Within 60 days of completion |
| UK resident with no CGT to pay (for example, gain covered by the £3,000 allowance or a loss) | No 60-day return is usually needed; include the sale on your Self Assessment return if you complete one | Self Assessment deadline |
| Not UK resident, selling any UK property or land | Report every disposal, even with no tax to pay or a loss | Within 60 days of completion |
| Anyone claiming a capital loss | Claim the loss so it can be set against other gains | Within 4 years of the end of the tax year of the loss |
If you are UK resident and sell a UK residential property with CGT to pay, you must report it and pay the estimated tax within 60 days of completion, using HMRC’s “Report and pay Capital Gains Tax on UK property” service. This applies to completions on or after 27 October 2021; before that the deadline was 30 days (GOV.UK: Report and pay CGT on UK property).
If you complete a Self Assessment tax return, include the sale there as well; the tax you have already paid is credited. Step-by-step guidance: CGT 60-day reporting.
Can I reduce CGT when I sell a rental property?
- Use each owner’s allowance and basic-rate band. Joint owners each have their own £3,000 allowance and their own basic-rate band (see the joint-ownership example above).
- Losses. Capital losses are set against gains in the same tax year first, then carried forward. You must claim a loss within 4 years of the end of the tax year in which you made it (GOV.UK: CGT losses).
- Private Residence Relief, if you lived there. If the property was your home at some point, the periods you lived there plus the last 9 months of ownership are usually exempt (36 months in some disability and care-home cases) (GOV.UK). More: Private Residence Relief.
- Lettings relief now applies only if you lived in the home at the same time as your tenants (GOV.UK).
- Timing. If your income will be lower in a particular tax year, more of the gain may fall in the 18% band. Plan this before you exchange contracts, not after.
What if the buy-to-let was gifted or inherited?
If someone gave you the property, your starting cost is usually its market value on the date of the gift. Gifts between spouses or civil partners who live together are the exception: the original cost carries over. If you inherited it, use the value for Inheritance Tax (probate value), or the market value at the date of death if that is not known (GOV.UK: market value). Giving a buy-to-let away during your lifetime is treated as a disposal at market value, so it can create a CGT bill even though no money changes hands.
What is changing? (enacted, not yet in force)
From 6 April 2027, income tax on rental profits in England and Northern Ireland rises to 22%, 42% and 47% (Finance Act 2026, section 7); Scottish and Welsh property rates are set separately. This affects rental income, not capital gains tax. The next Budget is on 28 October 2026, and we will review this page afterwards.
Getting advice before you sell
Thinking about selling? Our capital gains tax advice service reviews your figures with you before you exchange contracts, including allowable costs, ownership and timing. For a first estimate, try our CGT calculator.
Frequently asked questions
Do I pay CGT if I sell a buy-to-let at a loss?
No. You can report the loss and set it against other gains in the same tax year or later years, as long as you claim it within 4 years of the end of the tax year in which you made the loss.
Does my mortgage reduce the gain?
No. The gain is the sale price less the purchase price and allowable costs. Mortgage interest and mortgage arrangement fees cannot be deducted.
Do I need a 60-day return if there is no CGT to pay?
If you are UK resident, usually not. If you are not UK resident, yes: every disposal of UK property or land must be reported within 60 days of completion, even if you made no profit or a loss.
What CGT rate applies if I am a basic-rate taxpayer?
18% on the part of the gain that fits within your unused basic-rate band, and 24% on the rest. A large gain can mean that most of it is taxed at 24%.
Do I pay CGT if I give a buy-to-let to my children?
Usually yes. A gift to anyone other than your spouse or civil partner is treated as a sale at market value, so CGT can be due even though you receive no money.
About this guide
Written and reviewed by Simon Misiewicz FCCA, ATT, MBA, Director, Optimise Accountants. Simon has invested in property since 2006 and leads a team of five ACCA-qualified accountants.
Last reviewed: 2 October 2026. Figures checked against GOV.UK, HMRC manuals and legislation.gov.uk for the 2026/27 tax year.
Optimise Accountants is the trading name of OPTIMISE ACCOUNTANTS LIMITED, registered in England and Wales, company number 04856185. Registered office: Office 15 Bramley House 2a, Bramley Road, Long Eaton, Nottinghamshire NG10 3SX.
This guide is general information and not personal tax advice. Your position depends on your circumstances, so take advice before you exchange contracts.
