Capital Gains Tax when selling a buy-to-let in 2026: what you'll actually pay
Capital Gains Tax on a UK buy-to-let property in 2026 is 18% for basic-rate taxpayers (within the basic band) and 24% for higher-rate taxpayers. The annual allowance is £3,000. The tax must be reported and paid within 60 days of completion. This guide walks through the calculation, a worked example, and the reliefs that can reduce the bill.
Quick answer: Capital Gains Tax on a UK buy-to-let property in the 2026 to 2027 tax year is charged at 18% for basic-rate taxpayers (within the basic Income Tax band) and 24% on any gain falling into the higher-rate band, after deducting the £3,000 annual exempt amount and allowable costs such as stamp duty, legal fees, agent fees and capital improvements. The gain must be reported and paid to HMRC within 60 days of completion via the online "Report Capital Gains Tax on UK property" service, in addition to declaring it on the annual self-assessment return. Reliefs such as Private Residence Relief, Lettings Relief in narrow cases, and spousal transfers can reduce the bill significantly. If you want to sell with the tenants in place to avoid void months, see our guide on selling a tenanted property without evicting your tenants.
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
These residential property rates were set at the October 2024 Budget (the 18%/24% structure replaced the previous 18%/28% rates from 6 April 2024) and remain in force for 2026 to 2027.
The annual exempt amount (CGT allowance) is £3,000 per individual for 2026 to 2027. The allowance was cut from £6,000 to £3,000 on 6 April 2024 and has stayed at that level since.
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, as set out in HMRC's guidance on working out your gain, 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. Mortgage interest is also not deductible against CGT — since the Section 24 mortgage interest restriction fully kicked in (2020/21), interest only generates a 20% basic-rate Income Tax credit against rental profits, and never reduces the CGT bill on sale.
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.
Thinking of exiting the buy-to-let? The 2026 tax and regulatory landscape is changing the maths for landlords — read the case for selling vs holding in 2026.
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 living together are made on a no-gain-no-loss basis (effectively CGT-exempt). If one spouse is a basic-rate taxpayer and the other is a higher-rate taxpayer, transferring the property (or a share) before sale can move part of the gain into the lower 18% band. Following the Spring Budget 2023 reforms, separating spouses also get up to three tax years from the end of the year of separation to transfer the property between them on a no-gain-no-loss basis. 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. Our tired landlord exit guide covers how to sequence a sale around the tax year if timing matters to you.
Sell with tenants in situ: the CGT calculation is identical whether you sell with vacant possession or with the tenants in place — sale price minus purchase price minus allowable costs. Selling tenanted avoids void months, Section 21 timing, and the cost of marketing an empty property. See our deep guide on selling a tenanted property without evicting your tenants.
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. The 18%/24% residential property rates were set at the October 2024 Budget and remain in force for 2026 to 2027.
What is the Capital Gains Tax allowance for 2026 to 2027?
£3,000 per individual. The annual exempt amount was cut to £3,000 from 6 April 2024 and remains at that level. Jointly owned properties allow both owners to use their allowance, 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 generated a 20% Section 24 basic-rate tax credit against rental income). 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.
How does CGT work if I am selling a tenanted buy-to-let?
The CGT calculation is the same whether the property is sold tenanted or with vacant possession — the gain depends on sale price, purchase price and allowable costs, not on tenancy status. Selling tenanted (with the tenants in situ) avoids void months and Section 21 timing problems. See our guide on selling a tenanted property without evicting your tenants.
Does Section 24 affect Capital Gains Tax?
No. Section 24 restricts how landlords deduct mortgage interest from rental income (a 20% basic-rate tax credit replaces full deduction). It is an Income Tax rule and has no direct effect on the CGT calculation when you sell. Mortgage interest is never deductible against CGT.
Can I transfer the buy-to-let to my spouse before selling?
Yes. Transfers between spouses or civil partners living together are made on a no-gain-no-loss basis, so no CGT is triggered on the transfer itself. If you are separating, the no-gain-no-loss treatment now extends for up to three tax years from the end of the year of separation following the Spring Budget 2023 reforms.
Selling a buy-to-let and want certainty on the timeline?
We pay cash for buy-to-let property across South Yorkshire, with completion in as little as 7 days. The CGT 60-day clock then runs from a known completion date. Cash offer within 24 hours.
Get a Cash Offer