Selling a Rental Property: CGT, Reporting Deadlines and Tax Planning Guide

Selling a buy-to-let or investment property in the UK triggers Capital Gains Tax on any profit above the annual exempt amount. The rules are more complex — and the reporting deadlines stricter — than many landlords realise. A failure to report and pay on time results in automatic penalties and interest, regardless of whether you were aware of the obligation.

This guide explains how the tax is calculated, what reliefs are available, and what steps you can take to manage your liability effectively.

Current CGT Rates on Residential Property

As of the 2026/27 tax year, the CGT rates on residential property (investment properties, second homes and holiday lets) are:

• 18% for gains within the basic-rate band.
• 24% for gains that fall within or above the higher-rate band.

These rates apply after the gain has been added to your other income for the year to determine which band applies. The annual CGT exempt amount is currently £3,000 per individual, reduced from the historic £12,300 in prior years.

For gains on non-residential property (commercial property, land), the rates are also 18% and 24% following the alignment of residential and non-residential CGT rates from 30 October 2024.

Calculating Your Capital Gain

Your gain is the difference between your sale proceeds and your "base cost," adjusted for allowable expenses and reliefs.

Sale proceeds: the amount actually received (or, in connected-party transactions, the market value).

Less your base cost:

• Original purchase price.
• Stamp Duty Land Tax paid on acquisition.
• Solicitors' and surveying fees on acquisition.
• Any enhancement expenditure — capital improvements that add value to the property (not repairs or routine maintenance, which are revenue expenses already deducted against rental income).

Less selling costs:

• Estate agent fees.
• Solicitors' fees on sale.
• Any other transaction costs directly related to the disposal.

The resulting figure is your gain before reliefs. From this you deduct any available Private Residence Relief (see below) and the annual exempt amount of £3,000. The net taxable gain is then taxed at 18% or 24% depending on your income position for the year.

Pre-1982 properties: where an asset was held before 31 March 1982, the base cost is "rebased" to the market value at 31 March 1982. This is known as the 31 March 1982 rebasing rule and ensures that gains arising before that date are not brought into charge. If you have held a property for a very long time, this rebasing can significantly reduce the chargeable gain.

The 60-Day Reporting Requirement

This is the most time-critical aspect of selling residential property. Since October 2021 (extended from the original 30-day rule), UK residents who sell a UK residential property with a chargeable gain must:

1. Report the disposal to HMRC within 60 days of completion.
2. Make a payment on account of the CGT due within the same 60-day window.

The report is made through HMRC's Capital Gains Tax service (a separate system from Self-Assessment), and you will need a Government Gateway account and a Capital Gains Tax reference number to access it. The payment must be estimated at the time of reporting — you will refine the final figure through your Self-Assessment tax return.

This applies even if you are also filing a Self-Assessment return. The 60-day rule is a separate reporting obligation. If your accountant normally handles your Self-Assessment, you need to ensure the 60-day report is also within scope of their engagement.

Penalties for late reporting are £100 for returns up to six months late, daily penalties thereafter, and interest on any late payment. Non-residents selling UK residential property have been subject to a reporting requirement since April 2015.

Private Residence Relief: If You Ever Lived There

If you lived in the property as your main residence for any period — even if you subsequently let it out — Private Residence Relief (PRR) may be available. PRR exempts a proportion of the gain equal to the fraction of your total ownership period for which the property was your main residence.

The final nine months are always treated as if you were living there, regardless of actual occupation. So if you occupied a property for five years, then let it for three years before selling, the exempt fraction is (5 years + 9 months) / (5 years + 3 years) = 5.75 / 8 = 71.9% of the gain is exempt under PRR.

Letting relief, which was formerly available for the gain attributable to let periods where you had previously lived in the property, was substantially restricted in April 2020. It now only applies where the owner is in shared occupancy with the tenant — in practice, this is rare for most landlords.

Periods of absence while you were away from the property — such as working overseas — may still qualify as deemed residence in certain circumstances, provided the property was your main residence before the absence and you returned to it afterwards.

If you have two or more properties and are unsure which is treated as your main residence for PRR purposes, a Principal Private Residence election can be made to HMRC. The election has strict time limits — generally within two years of acquiring the second property — and backdating is limited.

Losses on Property Sales

If you sell at a loss, the loss can be:

• Set against other capital gains in the same tax year (subject to the offset ordering rules).
• Carried forward indefinitely to set against future capital gains.

Capital losses on residential property can only be set against capital gains — they cannot be offset against income tax. If you have both gains and losses in the same tax year, the losses are set against the gains first before the annual exempt amount is applied.

Timing of losses: if you have an investment property that has fallen in value, and you also have gains in the same tax year (or pending gains from another disposal), selling the loss-making property in the same tax year as the gain allows you to net the positions before calculating tax.

Strategies to Manage Your CGT Liability

Spousal transfers: assets transferred between spouses or civil partners are treated as a "no gain, no loss" disposal — no CGT arises at the point of transfer, and the receiving spouse inherits the original base cost. This allows gains to be split between two individuals' annual exempt amounts, and between two individuals' rate bands.

Timing the disposal across tax years: the CGT rate and annual exempt amount are assessed per tax year (6 April to 5 April). If a sale can be timed so that completion falls in the new tax year, an additional year's annual exempt amount may be available.

Pension contributions: making a pension contribution in the year of a property sale increases the basic-rate band, potentially keeping more of the gain at 18% rather than 24%.

Offshore status: non-UK residents are subject to CGT on disposals of UK residential property since April 2015. The base cost is generally the market value at 5 April 2015 for properties held before that date (or actual cost if lower and an election is made). Non-residents have specific reporting obligations and should take advice before selling.

Tax rules in this area have changed frequently in recent years. The rates and thresholds in this article apply as of 2026/27 and should be verified before any disposal.

How Global Investments Can Help

Global Investments advises property investors on structuring disposals to minimise CGT, whether for a single property, a portfolio sale, or where multiple jurisdictions are involved. We work with specialist UK tax advisers and solicitors to ensure reporting obligations are met within the required deadlines. Contact our team well in advance of your planned sale date.