Quick answer
Selling a rental property can trigger capital gains tax at 18% or 24% on the gain above the £3,000 annual exempt amount. You must report and pay the tax on UK residential property within 60 days of completion using HMRC’s online service.
Updated October 2026 · Figures based on 2025/26 rates
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How the gain is calculated
Sale price minus purchase price, minus allowable costs such as solicitor and estate agent fees, stamp duty paid when buying and capital improvement costs.
Rates and the exempt amount
Gains are taxed at 18% within the basic-rate band and 24% above it. Each person has an annual exempt amount of £3,000 for 2025/26.
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The 60-day deadline
You must file a UK property return and pay estimated tax within 60 days of completion. Missing it can cause penalties and interest, even if you also report the gain on Self Assessment.
Reducing the bill
Use both spouses’ allowances, deduct all allowable costs, and consider the timing of the sale across tax years.
How the gain on a rental property is worked out
Capital Gains Tax is charged on the gain, not on the sale price. The gain is broadly the sale proceeds less what you paid and certain allowable costs. Allowable costs usually include solicitor and estate agent fees on buying and selling, Stamp Duty Land Tax paid on purchase and the cost of genuine capital improvements such as an extension. Routine repairs and redecoration that you have already claimed against rental income cannot be claimed again.
For residential property, the rates are 18% on gains that fall within your remaining basic rate band and 24% on the rest. Everyone has an annual exempt amount of £3,000 for gains. The rate you pay depends on your other taxable income in the same tax year, because gains are stacked on top of income.
A worked example
This is an illustrative example, not a real client. Hannah sells a buy-to-let flat in England. She has other taxable income of £30,000 from her job, and the tax year is 2025/26.
| Item | Working | Amount |
|---|---|---|
| Sale price | £280,000 | |
| Less selling costs | Agent and legal fees | (£3,500) |
| Less original cost | £190,000 + £4,500 purchase costs | (£194,500) |
| Less improvements | New kitchen extension | (£10,000) |
| Gain | £280,000 – £3,500 – £194,500 – £10,000 | £72,000 |
| Less annual exempt amount | (£3,000) | |
| Taxable gain | £69,000 |
Hannah’s taxable income after the Personal Allowance is £30,000 – £12,570 = £17,430. The basic rate band is £37,700, so £37,700 – £17,430 = £20,270 of it is unused.
| Slice of gain | Working | Tax |
|---|---|---|
| At 18% | £20,270 x 18% | £3,648.60 |
| At 24% | (£69,000 – £20,270) = £48,730 x 24% | £11,695.20 |
| Total CGT | £15,343.80 |
This tax must be reported to HMRC and paid within 60 days of completion, using the UK property reporting service. The gain also needs to be included in her Self Assessment return for the year.
The 60-day rule in more detail
The 60 days are counted from the date of completion, not exchange. Report and pay even if you have not yet received your tax code or filed your Self Assessment return. If you are late, you may face a late filing penalty and interest. You can usually make a reasonable estimate and adjust it later on your annual return. If you owe no tax, for example because the property was your main home for the whole period or the gain is covered by losses, you may still need to check whether a report is needed, so check current HMRC guidance.
Common mistakes
- Missing the 60-day deadline because you assumed the tax could wait until 31 January.
- Forgetting to deduct purchase costs and selling costs from the gain.
- Claiming repairs as improvements, or the reverse.
- Using the wrong tax rate by ignoring other income in the same year.
- Forgetting that transfers between spouses or civil partners are usually made at no gain and no loss, so ownership planning should happen before a sale and not after.
A short checklist
- Gather the purchase contract, completion statement and invoices for improvements.
- Establish the completion date and set a diary reminder 60 days later.
- Work out the gain and any losses available.
- Estimate your other income for the tax year to find the rate.
- Report and pay within 60 days, then include the gain on your return.
Related reading
See our guides on capital gains tax on a second home, how to report capital gains to HMRC, the CGT annual exempt amount and how to claim capital losses. Our capital gains tax return service covers the reporting.
SATR can prepare your property gain calculation and file the report and your return online for a fixed fee from £199 + VAT, using qualified UK accountants.
This is general information, not personal tax advice. Reliefs such as private residence relief can change the result, so check current HMRC guidance.
Planning ideas worth considering before you sell
The timing of a sale can change the tax. Because gains are taxed using the bands for the tax year in which the property is sold, a year in which your other income is lower may leave more of the basic rate band available at 18%. Equally, if you own the property jointly with a spouse or civil partner, each of you has your own £3,000 annual exempt amount and your own bands, so the split of ownership matters. Any change of ownership should be made properly and in good time, and it should reflect a genuine transfer, not a paper exercise.
If you have losses from earlier disposals that were reported to HMRC, they may be set against the gain. Current-year losses are used first, then losses brought forward. It is also worth checking whether any part of the gain relates to a period when the property was your own home, as relief may apply to that portion.
None of this removes the need to report on time. Even where you expect little or no tax, speak to an adviser or read current HMRC guidance before the 60 days run out.
Frequently asked questions
Do I still report the sale on my tax return?
Yes. The disposal is reported on your Self Assessment return, and the 60-day payment is credited.
What if I made a loss?
Losses can be reported to HMRC and carried forward against future gains.
Do I pay CGT if I sell a property I lived in as well as let?
Possibly less. Private residence relief may reduce the gain for periods when it was your main home. The rules are detailed, so check current HMRC guidance or take advice.
Can I offset the costs of selling?
Yes. Reasonable costs of selling, such as agent and legal fees, are normally deducted when working out the gain.
What if I miss the 60-day deadline?
Report as soon as possible. HMRC may charge penalties and interest for late reporting and late payment.
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Conclusion
Selling a rental property triggers Capital Gains Tax at 18% or 24% on the gain above the £3,000 annual exempt amount. You must report and pay within 60 days of completion. Deduct all allowable costs, use available reliefs and include the gain on your Self Assessment return.
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