Capital Gains Tax when you sell a rental property
Selling a rental property triggers Capital Gains Tax on the increase in value. You must report and pay within 60 days of completion through a UK Property Account, separately from your tax return. Rates are 18% for basic-rate taxpayers and 24% for higher-rate, after the £3,000 annual exempt amount.
The 60-day deadline catches almost everyone
Since April 2020, a UK residential property disposal must be reported and the tax paid within 60 days of completion. Not the end of the tax year. Not 31 January. Sixty days.
It is a separate filing from your Self Assessment return, made through a UK Property Account which you have to set up before you can use it. Penalties apply for missing it even if the tax itself is eventually paid through your return.
The single most common expensive mistake we see is a landlord who sold in June and assumed it went on the January return.
Tell your accountant when you accept an offer, not when the money lands. Sixty days from completion is less time than it sounds once you have gathered purchase documents from fifteen years ago.
Working out the gain
Start with the sale proceeds, deduct what you paid, then deduct the costs of buying and selling and any capital improvements.
| Deductible against the gain | Not deductible |
|---|---|
| Original purchase price | Mortgage capital repayments |
| Stamp Duty paid on purchase | Mortgage interest |
| Legal and survey fees on purchase | Routine repairs and redecoration |
| Estate agent and legal fees on sale | Insurance and running costs |
| Capital improvements (extensions, new rooms) | Your own labour |
Rates and allowances
The gain is added to your income to decide which rate applies.
| Band | Rate on residential property |
|---|---|
| Basic rate | 18% |
| Higher and additional rate | 24% |
| Annual exempt amount | £3,000 per person |
Reliefs worth knowing about
Private Residence Relief applies if the property was ever your main home, covering the period you lived there plus the final nine months of ownership.
Lettings relief still exists but since April 2020 it only applies where you shared occupancy with the tenant, which excludes most buy-to-let.
Transferring a share to a spouse before sale uses both annual exemptions and can move part of the gain into a lower band. It must be done before exchange, and it is a genuine transfer, not a paper exercise.
If you made capital losses on other assets, they can be set against the gain.
This guide is general information, current at 10 November 2026. Tax rules change and depend on your circumstances. Please take advice before acting on it.