Capital Gains Tax on property

For residential property, Capital Gains Tax is charged at 18% if you are a basic rate taxpayer and 24% if you are a higher or additional rate taxpayer. The rate depends on your total income plus the gain, because the gain is added on top of your income to decide which band it falls in. You only pay on the gain (the profit), not the whole sale price, and only on the amount above your £3,000 annual allowance.

If you sell a UK residential property and there is CGT to pay, you must report it and pay the tax within 60 days of completion, using HMRC’s online property reporting service. This is separate from your annual Self Assessment return and the deadline is strict, with penalties and interest for missing it. It catches a lot of people out, because it is much sooner than the usual January tax deadline. We handle the 60-day return so it is filed correctly and on time.

Usually not. Private Residence Relief means you do not normally pay CGT when you sell the home that has been your only or main residence throughout your ownership. The relief can be reduced if you let the property out, used part of it exclusively for business, have a very large garden, or were away for long periods. If the property was always genuinely your home, there is typically no CGT and nothing to report.

Start with the sale price, then deduct what you paid for it, the costs of buying and selling (legal fees, stamp duty, estate agent fees) and the cost of any capital improvements such as an extension. That gives your gain. You then deduct your £3,000 annual allowance, and the rest is taxed at 18% or 24% depending on your income. Routine repairs and maintenance do not count, only improvements that add value. Our calculator gives a quick estimate and we prepare the exact figure.

Legitimate ways include deducting every allowable cost and capital improvement, using both partners’ annual allowances and tax bands on a jointly owned property, claiming Private Residence Relief for any period it was your main home, and timing a sale across two tax years to use two annual allowances. For landlords, how the property is owned can also matter. The right combination depends on your circumstances, so it is worth planning before you sell, not after.

For UK residential property, you generally only need to make a 60-day report if there is CGT to pay. If the gain is covered by Private Residence Relief or falls within your annual allowance so there is no tax, you usually do not need to file the 60-day return, though the gain may still need noting on your Self Assessment in some cases. Because the rules have exceptions, it is worth checking rather than assuming, which we are happy to do.