Capital Gains Tax when selling a buy-to-let in 2026: what you'll actually pay

What are the CGT rates on a buy-to-let in 2026?

For the 2026 to 2027 tax year, Capital Gains Tax on residential property (which includes buy-to-let) is charged at:

• 18% for basic-rate taxpayers, within the basic Income Tax band
• 24% for higher-rate and additional-rate taxpayers, and for any portion of the gain that takes you above the basic band

The annual exempt amount (CGT allowance) is £3,000 per individual for 2026 to 2027. This is the amount of gain you can make without paying CGT.

The full official rates and rules are on the gov.uk Capital Gains Tax page.

How is CGT calculated on a buy-to-let?

The basic formula is:

CGT = (Sale price - Purchase price - Allowable costs - Annual allowance) x CGT rate

Allowable costs include:

• Stamp duty paid on the original purchase
• Legal fees on purchase and sale
• Estate agent fees on the sale
• Survey costs (when buying)
• Capital improvements (extensions, new kitchens, new bathrooms — but not regular maintenance, repairs, or decoration)

Note: regular maintenance, repairs, and routine decoration cannot be deducted from your gain. Those count as revenue costs and were (where applicable) deducted from your rental income tax already.

Worked example: a £200,000 buy-to-let sold in 2026

Let's run through a typical example to show how the numbers work.

Setup:

• Purchased property in March 2018 for £140,000
• Stamp duty paid: £4,200 (3% surcharge on second property)
• Legal fees on purchase: £1,500
• Added a loft conversion in 2021: £25,000
• Selling in May 2026 for £200,000
• Estate agent fees on sale: £3,000 (1.5% + VAT)
• Legal fees on sale: £1,200
• Owner is a higher-rate taxpayer

Calculation:

Sale price: £200,000
Purchase price: £140,000
Stamp duty + purchase legals: £5,700
Capital improvement (loft): £25,000
Sale costs (agent + legals): £4,200
Annual CGT allowance: £3,000

Gain = £200,000 - £140,000 - £5,700 - £25,000 - £4,200 - £3,000 = £22,100

CGT at 24% (higher rate) = £22,100 x 24% = £5,304

The seller receives £200,000 - £5,304 (CGT) = £194,696 (before any mortgage redemption).

What is the 60-day CGT reporting rule?

Since 2020, you must report and pay CGT on UK residential property sales within 60 days of completion. This is a separate filing from your annual self-assessment return, made via HMRC's online "Report Capital Gains Tax on UK property" service.

Missing the 60-day deadline triggers automatic penalties: £100 immediately, plus daily penalties after three months. The CGT liability itself accrues interest from day 60.

You'll also still need to declare the gain on your self-assessment for the relevant tax year. The 60-day filing is in addition to, not instead of, your annual return.

The full HMRC guidance is at gov.uk: Tax when you sell property.

What reliefs can reduce the CGT bill?

Several reliefs may apply depending on your circumstances.

Private Residence Relief (PRR)

If the property was at any point your main home, the gain attributable to the period it was your main home (plus the final 9 months) is exempt from CGT. This is the most valuable relief and applies to properties that were once your home and were later let out.

Lettings Relief

Available only where Private Residence Relief applies AND you shared occupancy with a tenant during the let period. The relief was significantly restricted in April 2020 and now applies only in narrow circumstances.

Annual exemption

Each individual gets a £3,000 annual CGT allowance. If a property is jointly owned, both owners can use their allowance, doubling the tax-free amount to £6,000.

Transfer between spouses

Transfers between spouses or civil partners are CGT-exempt. If one spouse is a basic-rate taxpayer and the other is a higher-rate taxpayer, transferring the property (or share) before sale can move the gain into the lower tax band. Time this carefully and seek tax advice.

Brought-forward losses

Any unused capital losses from previous tax years can be set against this year's gain to reduce the CGT bill.

How does CGT interact with the speed of sale?

The CGT rate doesn't depend on how fast you sell. It depends on when the contract completes and which tax year that falls into. Two timing considerations matter.

First, if you can spread sales across two tax years (for example, completing on a sale on 6 April rather than 5 April), you get two annual allowances.

Second, the CGT bill is due 60 days after completion regardless of how the sale was achieved. A cash sale that completes in 7 days still triggers the same 60-day reporting clock as an open-market sale that takes 6 months.

The cash sale advantage is around certainty and timing of completion, not around CGT. If you're a higher-rate taxpayer with a large gain, the difference between selling now and selling in three months can affect which tax year the gain falls into, which affects when the 60-day clock starts.

Please note: this guide summarises CGT rules as published by HMRC and gov.uk but does not constitute tax advice. Every situation is different. We strongly recommend speaking to an accountant or chartered tax adviser before completing a buy-to-let sale, particularly where the gain is large or where reliefs may apply.

What about Stamp Duty when selling?

Stamp Duty Land Tax (SDLT) is paid by the buyer, not the seller. When you sell, you don't pay SDLT.

You may have paid the higher 3% additional dwellings surcharge when you originally bought the buy-to-let. That cost is deductible against the gain when you sell (as part of allowable costs). It's the only Stamp Duty link in the CGT calculation.

Common questions

What is the Capital Gains Tax rate on a buy-to-let in 2026?

18% for basic-rate taxpayers (within the basic Income Tax band) and 24% for higher-rate taxpayers, on the gain after the £3,000 annual allowance and allowable costs. These rates have applied since 6 April 2026.

What is the Capital Gains Tax allowance for 2026 to 2027?

£3,000 per individual. Jointly owned properties allow both owners to use their allowance, effectively doubling the tax-free amount to £6,000.

When do I have to pay Capital Gains Tax on a UK property sale?

Within 60 days of completion. You must report the gain and pay the CGT to HMRC via the online 'Report Capital Gains Tax on UK property' service. Missing this triggers automatic penalties starting at £100.

Can I deduct mortgage payments from my Capital Gains Tax?

No. Mortgage interest and capital repayments are not deductible from CGT. They are revenue costs (interest may have been deductible against rental income via the Section 24 tax credit). What you can deduct: stamp duty paid on purchase, legal fees on purchase and sale, estate agent fees on sale, and capital improvements (extensions, new kitchens, new bathrooms).

Will I pay CGT if I lived in the buy-to-let myself first?

Probably less. Private Residence Relief exempts the portion of the gain attributable to the period the property was your main home, plus the final 9 months. If the property was your main home for several years before you let it out, this can dramatically reduce the CGT bill.