Capital Gains Tax on Property: Planning Guide 2026/27

You plan CGT before you list the property, not after you accept an offer. The 24% higher rate, GBP 3,000 allowance, and 60-day deadline mean sloppy timing can now cost you thousands.

"This guide provides general information about UK landlord tax obligations. It is not financial or legal advice. Tax treatment depends on your individual circumstances and may change. Consider consulting a qualified accountant or solicitor for advice specific to your situation."

1. Current CGT rates and allowances (2026-27)

Residential CGT sits on top of your income tax bands.

Rates on residential property (disposals on or after 6 April 2024, confirmed as unchanged into 2026-27):

• 18% on gains in your unused basic-rate band.
• 24% on gains above that.

Annual exempt amount:

• GBP 3,000 per individual per tax year in 2025-26 and 2026-27, cut from GBP 6,000 in 2023-24.

Rates for other assets also moved to 18% / 24% from 30 October 2024, but your focus is residential.

The legislation lives in TCGA 1992 (section 1H for rates) and was amended by the Spring Finance Bill 2024 / Finance Act 2024.

2. Calculating the gain correctly

Basic formula under TCGA 1992:

Gain = (Sale proceeds) - (Allowable cost base)

Where allowable cost base is:

• Acquisition cost: purchase price plus SDLT, legal fees, survey fees.
• Enhancement expenditure: capital improvements that add value or prolong life (extensions, loft conversions, not like-for-like repairs).
• Incidental costs of acquisition/disposal: estate agent fees, legal fees on sale, some advertising.

No deduction for:

• Normal repairs and maintenance (those are income-tax expenses).
• Your own time and labour.

Example:

• Sold for GBP 300,000.
• Bought for GBP 200,000, SDLT/legals GBP 5,000.
• New extension GBP 30,000.
• Sale legal/agent fees GBP 5,000.
• Allowable cost base: 200,000 + 5,000 + 30,000 + 5,000 = GBP 240,000.
• Gain: 300,000 - 240,000 = GBP 60,000.

From there you apply PPR relief, lettings relief if any, then annual exemption and rates.

3. PPR relief, final 9 months, and lettings relief

Principal Private Residence (PPR) relief in TCGA 1992 s222-226 exempts the part of the gain that relates to periods you occupied the property as your only or main residence.

Key rules:

Exempt gain = Total gain x (Months of qualifying occupation + Final 9 months) / Total months owned

• Final period exemption: last 9 months of ownership always count as deemed occupation, provided it was your main home at some point.
• Extended to 36 months in specific cases for disabled people and care-home residents.

Lettings relief (since April 2020):

• Old generous "up to GBP 40,000" lettings relief is gone for most landlords.
• Now only available where you shared occupation with the tenant (eg lodger situation).
• For standard BTL where you moved out and then let it, you get no lettings relief.

Worked example: lived then let

Facts:

• Bought April 2010 for GBP 200,000, costs GBP 5,000.
• Lived there April 2010 - April 2018 (8 years).
• Let April 2018 - April 2026 (8 years).
• Sold April 2026 for GBP 350,000, sale costs GBP 5,000.
• No enhancements.

Step 1 -- gain:

• Cost base = 200,000 + 5,000 + 5,000 = GBP 210,000.
• Gain = 350,000 - 210,000 = GBP 140,000.

Step 2 -- months:

• Ownership: 16 years = 192 months.
• Qualifying occupation: 8 years = 96 months.
• Final 9 months deem relief: 9 months.
• Total qualifying: 96 + 9 = 105 months.

Step 3 -- PPR fraction:

• Exempt proportion = 105 / 192 = 54.7%.
• Exempt gain = 140,000 x 0.547 = GBP 76,580.
• Chargeable gain = 140,000 - 76,580 = GBP 63,420 (before annual exemption).

Step 4 -- annual exemption and rates:

• Less annual exempt amount GBP 3,000 = GBP 60,420 taxable gain.
• If you are higher-rate once this sits on top of your income, almost all of that is at 24%.
• Tax bill: approx GBP 14,501.
• No lettings relief because you did not share with tenants.

4. 60-day reporting and payment

Since 6 April 2020 (30 days, extended to 60 days from 27 October 2021), UK residents who make a taxable residential property gain must:

• Report the disposal via the CGT on UK Property online service.
• Pay the estimated CGT within 60 days of completion (not exchange).

Key points (2026-27):

• Rule applies to disposals of UK residential property where CGT is due. If full PPR relief means no CGT, no 60-day report is needed.
• You still report the gain again on your Self Assessment return if you are in SA.

Penalties:

• Late 60-day returns trigger fixed penalties and daily penalties if very late, plus interest on late paid CGT.
• Forums are full of people who waited until January and got stung. That is no longer an option.

5. BADR on former FHLs

Business Asset Disposal Relief (BADR) applies to disposals of certain business assets, including qualifying Furnished Holiday Let (FHL) businesses.

Autumn Budget 2024 and subsequent announcements changed rates:

• From 2025-26, BADR rate is 14% (up from 10%).
• From 2026-27, BADR rate increases to 18%.

Under TCGA 1992 (and HMRC guidance):

• BADR can apply on disposals of an FHL business if conditions are met and lifetime BADR limit not exceeded.
• If you reclassify an FHL as standard BTL and keep letting it long-term, you can lose BADR on that asset and be back in 18%/24% residential rates.

Given the FHL regime is being tightened and effectively abolished for new reliefs, you should get bespoke advice before banking on BADR at 14-18% in 2026-27.

6. Timing strategies: years, allowances, and bands

CGT planning is often about when you exchange/complete.

Annual exempt amount:

• You and a spouse/partner each get GBP 3,000 per year.
• Two owners = GBP 6,000 tax-free gain each year.

Use two tax years:

• If you can stagger disposals (eg one completes March, one in May), you can use two years' allowances.
• HMRC taxes based on date of disposal (normally exchange of contracts) for CGT, but 60-day reporting uses completion date -- watch both.

Manage the band:

• Gains that fall into your unused basic-rate band get the 18% residential rate.
• Everything above that band is at 24%.
• If your other income is low for a year (sabbatical, retirement), that can be a good year to crystallise gains.

Part-disposals and rebasing:

• Selling a share of a property (eg to a spouse) or granting a long lease can be a part-disposal under TCGA 1992 s21-22, with its own fraction rules.
• If you inherited property, your base cost is usually market value at date of death ("rebasing") under TCGA rules, not what the deceased paid.

Get these wrong and you either overpay or underpay and face backdated CGT with interest.

7. Common CGT mistakes and forum myths

Mistakes landlords actually make

Missing the 60-day report Treating CGT like the old SA system and waiting until the following January. The 60-day online report and payment is mandatory where CGT is due, and penalties mount quickly.

Forgetting enhancement vs repairs Not keeping records of capital improvements, so you under-claim costs. Or wrongly treating routine repairs as enhancements, which HMRC can challenge.

Mis-using PPR relief Claiming full PPR when they did not actually live there as their main home, or mis-counting months. Forgetting the final 9 months deemed occupation and therefore overpaying.

Assuming lettings relief still exists for BTL It does not, unless you shared the property with the tenant. Many landlords still think "I get GBP 40k lettings relief" because that is what old articles said.

Ignoring how other income sets the rate Working out CGT at a flat 24% when some of the gain actually falls into basic-rate band at 18%. Or vice versa, assuming 18% then finding salary pushes most of it to 24%.

Forum / Reddit myths

"If it was ever your home, there is no CGT." Wrong: PPR is fractional. If you only lived there for 5 years out of 20 (plus final 9 months), only that slice of the gain is exempt.

"You can delay CGT until Self Assessment." Wrong: for most residential sales with CGT due, you must report and pay within 60 days. The SA return comes later and reconciles the position.

"Just gift to your kids, no tax until they sell." Wrong: gifts to most people are disposals at market value under TCGA 1992. You can trigger CGT on a gift even when no cash changes hands.

"You can stack gains across multiple properties to use multiple allowances on the same person in one year." Wrong: you get one GBP 3,000 exemption per person per year, regardless of number of properties.

If you are thinking of selling in 2026-27, the smart sequence is: work out your PPR fraction, list all capital enhancements with invoices, estimate your band split (18% vs 24%), then pick a completion window that uses your allowances and minimises 24% exposure.

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