Landlord capital gains tax: rates, reliefs, deadlines

Published Tuesday 21 April 2026

Table of contents

• Who pays capital gains tax?
• What triggers capital gains tax liability?
• What are the landlord CGT rates?
• How is landlord capital gains tax calculated?
• Allowable expenses for capital gains tax
• What is the capital gains tax allowance for landlords?
• Landlord capital gains tax exemptions and reliefs
• FAQs on capital gains tax for landlords

Key takeaways

• Recognise that CGT applies to your profit from a property sale, not the full sale price, and that you must report and pay any tax owed within 60 days of completion to avoid interest charges of 7.75% per year.
• Reduce your taxable gain by deducting allowable costs such as legal fees, estate agent fees, and property improvement expenses like extensions or loft conversions, but note that routine repairs do not qualify.
• Utilise available reliefs and allowances to lower your CGT bill, including the £3,000 annual allowance per person, Private Residence Relief if you once lived in the property, and joint ownership to multiply the allowance across co-owners.
• Time your property sale strategically by spreading the transaction across two tax years to use your annual CGT allowance twice, and seek professional advice to make sure this approach works for your situation.

Who pays capital gains tax?

Capital Gains Tax (CGT) applies to UK landlords who sell a rental property for more than they paid for it, a tax that will impact an estimated 264,000 individuals in 2025 to 2026. You pay tax on the profit from the sale, not the full sale price.

CGT typically applies to:

• buy-to-let properties
• business premises
• land
• inherited homes that aren't your main residence

You don't pay CGT when you sell your primary home.

What triggers capital gains tax liability?

A disposal is any transaction where you transfer ownership of a property or receive compensation for it. CGT is triggered not just when you sell, but also when you:

• give property away to someone other than a spouse or civil partner
• swap property for another asset
• receive compensation, such as an insurance payout after destruction

Your gain is calculated from the date you acquired the property to the date you disposed of it.

What are the landlord CGT rates?

The CGT rate you pay depends on your income tax band. Landlords pay either 18% or 24% CGT on residential property gains for the 2024/25 tax year. Your rate depends on your total taxable income, including the gain itself.

The two CGT rates are:

18% CGT basic rate

Basic rate taxpayers (earning £12,571 to £50,270 annually) pay 18% CGT on residential property gains.

Key points:

• Rate application: 18% applies to gains within the basic rate band
• Band threshold: Gains pushing you above £50,270 are taxed at the higher 24% rate
• Allowance deduction: Subtract your CGT allowance before calculating tax

24% CGT higher rate

Higher rate taxpayers (earning £50,271 or more) pay 24% CGT on residential property gains.

Key points:

• Other assets: The 20% rate applies to non-property gains
• Available deductions: CGT allowance, improvement costs, and buying/selling expenses

How is landlord capital gains tax calculated?

To calculate your CGT, subtract allowable costs and your annual allowance from the sale profit. Then apply the appropriate tax rate based on your income. You must make payment within 60 days of completion.

Worked example: Stefani's CGT calculation

Stefani is a private landlord who sells one of her two properties for £75,000 more than she paid. Here's how her tax bill breaks down:

1. Calculate the gain: £75,000 sale profit
2. Deduct improvement costs: £75,000 minus £10,000 extension = £65,000
3. Deduct CGT allowance: £65,000 minus £3,000 = £62,000 taxable gain

Stefani earns £30,000 annually, so she starts in the basic rate band.

1. Apply the basic rate (18%): £50,270 threshold minus £30,000 income = £20,270 of gain taxed at 18% = £3,648.60
2. Apply the higher rate (24%): remaining £41,730 of gain taxed at 24% = £10,015.20

Stefani's total CGT bill: £13,663.80

For more help, check out the government's step-by-step guide on calculating Capital Gains Tax.

Market value scenarios

If you give away a property or sell it below market value to a connected person (such as a family member), HMRC treats the disposal as happening at market value. This means you'll pay CGT on the gain from your purchase price to the current market value, even if you received less or nothing.

When market value applies:

• gifting property to children or other family members
• selling to a relative at a reduced price
• transferring property to a connected company

Get a professional valuation to establish market value for your CGT calculation.

Allowable expenses for capital gains tax

Allowable expenses are costs directly related to buying or selling the property that you can deduct from your gain. These differ from running costs claimed against rental income.

Deductible expenses include:

• estate agent and auctioneer fees
• solicitor and legal fees
• Stamp Duty Land Tax paid on purchase
• advertising costs for the sale

Keep detailed records of these costs throughout ownership, as they can significantly reduce your final tax bill and help you avoid costly mistakes, especially since the interest rate for late payment currently stands at 7.75% per year.

What is the capital gains tax allowance for landlords?

The CGT allowance is the amount of profit you can make tax-free each year. For 2024/25, the allowance has fallen to just £3,000 per person, a significant drop from £12,300 in 2022/23.

How it works: Subtract the allowance from your gain before calculating tax. For example, a £32,000 gain minus £3,000 allowance equals £29,000 taxable gain.

Loss carry-forward: Previous years' property losses can reduce current gains or carry forward to future tax years.

Landlord capital gains tax exemptions and reliefs

CGT reliefs and exemptions reduce your tax liability by lowering the amount you pay tax on. These reliefs can save you hundreds or thousands of pounds on property sales.

Available reliefs include:

Multiple property owners

Joint ownership multiplies your CGT allowance by the number of owners, as each person has their own allowance.

Allowance by ownership:

• Single owner: £3,000 allowance
• Two owners: £6,000 total allowance (£3,000 × 2)
• Three owners: £9,000 total allowance (£3,000 × 3)

Each owner also calculates their share of the gain separately, which may result in different tax rates if owners have different income levels.

Private Residence Relief

Private Residence Relief reduces your CGT if you lived in the property as your main home at any point during ownership. The relief covers the period you occupied it, plus the final nine months of ownership which are always treated as a period of occupation, even if you'd moved out.

This relief isn't available if you never lived in the property. Check the eligibility criteria on the gov.uk website for full details.

Property improvement expenses

Property improvements that add value or extend the property can be deducted from your capital gain. These include:

• loft conversions
• extensions
• conservatories
• garages or outbuildings

Repairs don't count for CGT purposes. Replacing a boiler or fitting new windows maintains the property rather than improving it. These costs are claimed against your rental income instead, not your capital gain.

Non-resident landlord CGT

If you have UK rental property but you're not a UK resident, there are some extra rules for capital gains tax.

• Report disposals of UK land and property, even if you're not a resident. Non-residents can calculate their capital gains tax using the method shown earlier in this guide.
• Pay capital gains tax on part of the gain when you return to the UK if you're a temporary non-resident. If you have gains or losses that occur during the time you spent outside of the UK, you'll bring these forward to the current tax year on your return.

Non-residents should also read HMRC's guidance on direct and indirect disposals.

If the property you sell gets most of its value from UK land, it may be an indirect disposal. An indirect disposal means selling an asset that derives 75% or more of its gross value from UK land. In this case, you'll need to change how you calculate CGT.

Visit the HMRC website for more information.

Capital gains tax rollover relief

Rollover relief is where you reinvest the sale amount from one asset into a new asset, to defer or reduce your capital gains tax liability. You're rolling over the tax you need to pay on profit.

You can only claim rollover relief on certain assets, not on buy-to-let property. Furnished holiday lets and some other assets may count, but you should check HMRC guidance before you claim.

Inherited property and CGT

You do not pay capital gains tax straight away on an inherited property, and executors are entitled to the annual exempt amount for the year of death and the following two tax years. When you dispose of that asset and make a profit, you'll need to pay CGT.

For example, if you sell the house your parents passed down to you but already own another home, CGT applies to the gain. You don't pay CGT on your main home, so the inherited property is treated as a second property for tax purposes.

FAQs on capital gains tax for landlords

Here are answers to common questions about capital gains tax for landlords.

Do I pay CGT if I sell at a loss?

No, you don't pay CGT if you sell your property for less than you paid for it. You can use losses from one property to reduce gains on another, or carry the loss forward to future tax years.

Can I reduce my CGT by timing the sale?

Yes, spreading the sale across two tax years can help you use your annual allowance twice. For example, you could exchange contracts in one tax year and complete in the next, though you should get professional advice on this strategy.

What's the difference between CGT and income tax on rental income?

Income tax applies to your rental profits each year, while CGT applies when you sell the property. They're separate taxes with different rates and allowances.

Do married couples get two CGT allowances?

Yes, married couples and civil partners each have their own £3,000 CGT allowance. Transferring property between spouses is tax-free, which can help you use both allowances when selling.

When do I need to report and pay CGT?

You must report and pay CGT within 60 days of completion using HMRC's online property disposal service. Late payment attracts interest at 7.75% per year.