How much CGT do I pay when selling a second home UK?

For residential property, you pay 18% CGT if you're a basic rate taxpayer or 24% if you're a higher/additional rate taxpayer. You can deduct your £3,000 annual allowance, purchase costs, and improvement costs from the gain. You must report and pay within 60 days of completion.

Do I pay capital gains tax on my main home?

No, your main home (principal private residence) is exempt from CGT under Private Residence Relief. This applies to the entire period you lived there as your main home. The relief includes gardens up to 5,000 square metres. If you've let part of it or been absent, partial relief may apply.

How do I report CGT on property UK?

You must report and pay CGT on UK residential property within 60 days of completion using HMRC's UK Property Account online service. You'll need your National Insurance number, property details, dates, and costs. Even if you have no tax to pay (due to reliefs or allowances), you may still need to report.

Can I reduce CGT on property by improving it?

Yes, capital improvements that add value or extend the property's life can be deducted from your gain. This includes extensions, new kitchens/bathrooms, central heating, and structural works. General repairs and maintenance don't count — they must be improvements, not repairs.

Capital Gains Tax on Property UK 2026 — Second Homes & Buy-to-Let | PocketWise

Selling a property other than your main home usually means paying Capital Gains Tax. Here’s how it works and how to minimize your bill.

For the wider PocketWise overview of CGT rates, property rules, calculators and reliefs, use the main Capital Gains Tax hub.

CGT Rates on Property 2026-27

Taxpayer Status	CGT Rate
Basic rate (income up to £37,700)	18%
Higher rate (income above £37,700)	24%
Additional rate	24%

These are the same rates that applied to property before October 2024 — other assets have now been aligned to these higher rates.

When CGT Applies to Property

Taxable Property

Property Type	CGT Applies?
Second home	Yes
Buy-to-let	Yes
Holiday home	Yes
Inherited property (not your home)	Yes
Land	Yes
Overseas property	Yes (UK residents)

Exempt Property

Property Type	CGT Status
Main residence	Exempt (PRR)
Property in ISA (REITs)	Exempt
Property passing on death	Exempt (IHT may apply)

Calculating CGT on Property

Step-by-Step

Step	Calculation
1	Sale price
2	Minus purchase price
3	Minus buying costs
4	Minus selling costs
5	Minus improvement costs
6	= Gross gain
7	Minus losses
8	Minus annual allowance (£3,000)
9	= Taxable gain
10	Apply CGT rate

Allowable Costs

Deductible (Buying)	Amount
Stamp duty	Full amount
Solicitor fees	Full amount
Survey fees	Full amount
Estate agent (if you paid)	Full amount

Deductible (Selling)	Amount
Estate agent fees	Full amount
Solicitor fees	Full amount
Marketing costs	Full amount
EPC certificate	Full amount

Deductible (During Ownership)	Amount
Extension	Full amount
Loft conversion	Full amount
New kitchen/bathroom	Full amount
Central heating installation	Full amount
Structural repairs	Full amount

NOT Deductible	Notes
Mortgage interest	Not capital expenditure
Regular maintenance	Repairs, not improvements
Furniture	Unless sold with property
Your time	No deduction

Worked Examples

Example 1: Buy-to-Let Sale

Item	Amount
Purchase (2015)
Price	£200,000
Stamp duty	£7,500
Legal/survey fees	£2,000
Total cost base	£209,500

Improvements (2018)
Extension	£30,000
New bathroom	£8,000
Total improvements	£38,000

Sale (2026)
Price	£350,000
Estate agent (1.5%)	£5,250
Legal fees	£1,500
Net proceeds	£343,250

CGT Calculation
Net proceeds	£343,250
Minus cost base	£209,500
Minus improvements	£38,000
Gross gain	£95,750
Minus annual allowance	£3,000
Taxable gain	£92,750

CGT at 24% (higher rate)	£22,260

Example 2: Second Home — Basic Rate Taxpayer

Item	Amount
Sale proceeds (net of costs)	£180,000
Purchase cost (including costs)	£120,000
Improvements	£15,000
Gross gain	£45,000
Annual allowance	£3,000
Taxable gain	£42,000

Income: £35,000
Basic rate band remaining	£2,700
Gain at 18%	£486
Gain at 24%	£9,432
Total CGT	£9,918

Private Residence Relief (PRR)

Full Relief Conditions

Condition	Requirement
Occupation	Lived in as your home
Throughout ownership	From purchase to sale
Only/main home	One home at a time
Grounds	Under 5,000 sqm (1.24 acres)

Partial Relief — Period of Occupation

If you didn’t live there throughout:

Period	Treatment
Lived in	Full relief
Last 9 months	Full relief (even if not living there)
Away for employment anywhere (up to 4 years)	Full relief
Away for UK employment	Full relief (unlimited)
Absent other reasons	No relief

PRR Calculation Formula

Relief = Total Gain × (Qualifying Months ÷ Total Months Owned)

Example: Partial PRR

Detail	Period
Owned	10 years (120 months)
Lived in	6 years (72 months)
Let out	4 years (48 months)
Last 9 months	Qualify regardless

Calculation	Amount
Total gain	£100,000
Qualifying period	72 + 9 = 81 months
PRR relief	£100,000 × (81 ÷ 120) = £67,500
Taxable gain	£32,500
Annual allowance	£3,000
Final taxable	£29,500

Lettings Relief

When It Applies

Condition	Requirement
Period	Let out as residential accommodation
PRR period	Also lived there at some point
Maximum	£40,000

Lettings Relief Calculation

The relief is the lowest of:

PRR amount for letting period
£40,000
Gain from letting period

Example: Lettings Relief

Detail	Amount
Total gain	£100,000
Let period gain	£40,000
PRR on let period	£0
Lettings Relief available	Lower of £40,000/£40,000/£0
Lettings Relief	£0

Important: Lettings Relief is now limited — it only really helps if you shared the property with tenants.

Inherited Property

Base Cost for Inherited Property

Scenario	Base Cost
Inherited property	Market value at death
Probate valuation	Usually accepted
Sale soon after death	Little/no CGT
Hold and sell later	CGT on gain since death

Example: Inherited and Sold

Item	Amount
Inherited value (probate)	£250,000
Sale price (3 years later)	£300,000
Selling costs	£6,000
Gain	£44,000
Annual allowance	£3,000
Taxable	£41,000
CGT at 24%	£9,840

If You Move Into Inherited Property

Action	CGT Result
Move in as main home	Future gain exempt (PRR)
Sell immediately	CGT on gain since death
Let then sell	CGT on let period

Joint Ownership

Married Couples/Civil Partners

Rule	Detail
Each has £3,000 allowance	Combined £6,000
Transfer between spouses	No CGT triggered
Joint ownership	Each taxed on their share
Main home	Only one PRR between you

Example: Couple Selling Buy-to-Let

Detail	Amount
Owned 50/50
Total gain	£80,000
Each person’s gain	£40,000
Each person’s allowance	£3,000
Each person’s taxable	£37,000
Total taxable	£74,000

Non-Married Joint Owners

Situation	Tax Treatment
Unequal shares	Taxed on actual share
No allowance transfer	Each has own £3,000
Sale to each other	CGT at market value

60-Day Reporting Rule

Who Must Report

Situation	Must Report?
UK residential property with gain	Yes
UK residential property with loss	Required (to claim loss)
Main home (full PRR)	No
Non-residential property	No (use Self Assessment)

How to Report

Step	Action
1	Create Government Gateway account
2	Access UK Property Account
3	Enter property and transaction details
4	Calculate gain (HMRC helps with calculator)
5	Pay tax owed
6	Keep confirmation

Deadlines

Event	Deadline
Completion date	Day 0
Report and pay	Day 60
Late report	Penalties start

Penalties for Late Reporting

How Late	Penalty
Up to 6 months	£100
6-12 months	£300 or 5% of tax
12+ months	£300 or 5% of tax
Interest	From day 61

Reducing CGT on Property

Strategy 1: Use Both Allowances (Couples)

Before	After
Property in one name	Transfer 50% to spouse
One £3,000 allowance	Two £3,000 allowances
Saving	Up to £720 (24% of £3,000)

Strategy 2: Time the Sale

Timing	Benefit
Early in tax year	Use this year’s allowance
If gain is huge	Split over two tax years

Strategy 3: Maximize Deductible Costs

Review	Check
Purchase costs	Stamp duty, legal, survey
Improvements	Extensions, kitchens, structural
Sale costs	All agent and legal fees

Strategy 4: Use Losses

Action	Effect
Sell loss-making asset	Creates loss
Offset against property gain	Reduces tax
Carry forward unused	For future years

Strategy 5: Pension Contributions

Action	Effect
Make pension contribution	Extends basic rate band
More gain taxed at 18%	Instead of 24%

Capital Gains Tax Reliefs for Property

Working Away

Relief	Requirement
4-year employment absence	Full PRR
UK employment	Unlimited absence with PRR
Job location/requirement	Must be employment-related

Transferring Main Home Status

Scenario	Action
Own two properties	Nominate which is main home
Deadline	2 years from acquiring second
Can be retrospective	Within 2 years

Marriage/Separation

Situation	Treatment
Transfer on separation	No CGT (within certain period)
Divorce settlement	May have CGT implications
Get professional advice	Complex area

Common Property CGT Questions

What If Property Prices Fall?

Scenario	Treatment
Sell at a loss	No CGT
Report the loss	Within 4 years
Carry forward	Offset against future gains

CGT on Overseas Property

Rule	Application
UK resident	Pays UK CGT on worldwide gains
Foreign tax paid	May claim relief
Exchange rate gains	Taxable

Gifting Property

Gift To	CGT Treatment
Spouse	No CGT
Child	CGT on market value
Charity	No CGT
Below market value	CGT on market value

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