Capital gains tax (CGT) on UK property explained

Are you planning to sell your home or other assets? You may need to think about the implications of capital gains tax (CGT). Read on to find out more about capital gains tax in the UK, and how much you might have to pay.

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Capital gains tax is a tax that must be paid on any profits you make when you sell particular assets, such as property, that have increased in value. CGT is only due on the profit you make, not on the asset's sale price. 

For example, if you purchase an antique vase for £10,000 and later sell it for £30,000, you’ve earned £20,000. This £20,000 is the taxable amount, subject to some deductions.

Applying only to profits made, the UK’s capital gains tax is subject to an annual tax-free allowance of £3,000 until 2031 (although tax rules are subject to change). Married couples and civil partners who jointly share an asset can combine their allowances, making their total tax-free allowance £6,000. The gain is also reduced by allowable costs such as purchase and sale expenses. The CGT rate that is applied depends on your income tax band and whether the asset is residential property or falls under another category.

When selling certain assets in the UK, including property, you may incur capital gains tax on profits made. However, if the property you’re selling is your main home, you may be eligible for private residence relief, which can exempt some or all of the tax.

Even if you didn’t live in the property for the entire time you owned it, you may still qualify for partial relief – for example, the final nine months of ownership are automatically included as a period of occupation, or you may be able to nominate your main residence if you owned more than one property during that time.

Following changes announced by Chancellor Rachel Reeves as part of the Autumn Budget, these are the CGT rates for basic rate taxpayers and higher rate taxpayers (if you sold or disposed of an asset on or after 30 October 2024):

If you sell shares, investments, or personal possessions, the standard CGT rates are 18% if you’re a basic rate taxpayer and 24% if you’re a higher rate taxpayer.

There are different rules for a few specific categories:

• Carried interest, which is profits received by fund managers, was increased to 32% from 6 April 2025. From April 2026, carried interest will come under the income tax framework, so it will be treated as trading profits and subject to income tax and National Insurance contributions.
• Gains that qualify for business asset disposal relief and investors’ relief were set at 14% from 6 April 2025, and are due to match the main lower rate of 18% from 6 April 2026 (subject to future legislative changes).
• Investments held within a stocks and shares ISA are exempt from tax, so you don’t pay capital gains tax on profits made when you sell those investments.

Tax rules can change at any time, and may depend on your individual circumstances. For HMRC guidance and the official rate tables, see GOV.UK.

Your CGT allowance is the capital gains you can earn tax-free. For the 2026/27 tax year, the amount most individuals can earn tax-free is £3,000. This allowance was reduced from £6,000 in 2023/24 and £12,300 in 2022/23. The allowance has now been frozen until 2031. Most trusts have a separate, smaller allowance of £1,500. Tax is only paid on profits over this amount. 

If your asset or property is jointly-owned, you can combine your CGT allowances. Important points to note are that:

• CGT allowance is not related to your personal tax allowance
• You can't build up your CGT allowance as you're not permitted to carry over any unused allowance to the next tax year.

The amount you need to pay in capital gains tax when selling property or another asset will depend on your income, which determines whether you’re a basic rate or a higher rate taxpayer. It also depends on whether any tax reliefs apply.

If you’re a higher rate taxpayer, CGT is calculated by deducting the price you purchased the asset for from the new sale price. You then deduct any allowable costs and your CGT annual allowance of £3,000 (2026/27). Payable CGT is 24% of that profit. 

If you’re a basic rate taxpayer, CGT can be harder to calculate because you’ll need to work out personal income, profits and any other sources of income (such as the interest you might earn from your savings). You then need to subtract your personal allowance and any other income tax reliefs. Once you’ve added your total taxable income to your taxable gains, you can work out whether that amount is within the basic income tax band, or whether some of it falls within the higher rate tax band.

The government offers a capital gains tax calculator that lets you work out CGT on sales of property or shares.

You can deduct certain other costs from your gain when calculating capital gains tax. For property sales, these include stamp duty, estate agent and solicitors fees, or surveyor or valuation fees. You may also be able to deduct the costs of any renovation that add value to the property (an extension, for example). However, you cannot deduct costs relating to the upkeep of the property.

When it comes to sales of shares, you may qualify for a lower rate of CGT if you sell shares in a company that you work for and have a certain portion of the shares and voting rights. This is known as business asset disposal relief. For a company that isn’t listed on the stock exchange, sales of shares may qualify for investors’ relief.

You must pay any capital gains tax due within 60 days of selling a property in the UK. You pay this tax by creating an account with HMRC. This timescale was increased from 30 days in 2021.

If you usually declare on self assessment, you’ll also need to include the sale when filing, even if you’ve already paid the CGT.

Aside from the exceptions related to property, there are other types of assets where UK capital gains tax doesn’t usually apply.

In general, you won’t pay CGT on: 

• ISAs, including stocks and shares ISAs.
• Premium bonds and lottery winnings.
• UK government bonds (gilts).
• Assets transferred between spouses or civil partners, as long as you’re living together.
• Assets passed on when someone dies, although inheritance tax may apply instead. Different rules can apply if these assets are later sold, however.

There is no CGT payable on death, but the value of the home will be included in the estate. This means that inheritance tax may be payable instead.

If you inherit a property and sell it without making it your home, you may have to pay CGT. The amount you have to pay is based on the increase in value between the time of death and the date of sale.

Some savers choose to place their remaining profit in a lump sum savings account to earn interest. The Raisin UK marketplace makes saving simpler by allowing you to browse, apply to open, and manage accounts with over 40 banks and building societies all in one place.