What is Capital Gains Tax (CGT)?

Capital Gains Tax (CGT) is a tax you may need to pay when you sell (or “dispose of”) a property that has increased in value. The tax is paid on the profit you make – that is, the difference between what you paid for the property and what you sold it for – not on the total amount you receive.

Does Capital Gains Tax Apply to All Property Sales?

Not always. If you’re selling your primary residence (the home you live in), you’re usually covered by Private Residence Relief, which means you likely won’t need to pay CGT.

However, CGT may apply if:

• You’re selling a buy-to-let property.
• You’re disposing of a second home or holiday home.
• You’ve inherited a property and are now selling it.
• Part of the property has been used for business purposes.

How Much is Capital Gains Tax?

The amount you pay depends on your income tax band:

• Basic rate taxpayers: 18% on gains from residential property.
• Higher or additional rate taxpayers: 28% on gains from residential property.

Everyone gets an annual Capital Gains Tax allowance – the amount of gain you can make before tax kicks in. As of 2025–26, this allowance is £3,000 per individual.

📌 Important: Tax rules change, and individual circumstances vary. Always speak to a qualified tax advisor or accountant before making decisions.

How Do I Report and Pay CGT?

If CGT is due, you must:

1. Report the gain to HMRC – usually within 60 days of completion.
2. Pay the tax owed within the same 60-day period.

This can be done through HMRC’s online system or with the help of a tax professional.

Need Advice When Selling?

If you’re unsure how Capital Gains Tax might affect your property sale, we’re here to help. Our team can connect you with trusted tax experts and guide you through the selling process clearly and confidently.