60-day reporting rule: mandatory for UK residents
If you sell a UK residential property at a gain, you must report to HMRC and pay the CGT due within 60 days of completion — even if you plan to include it on your annual Self Assessment return. An automatic £100 penalty applies if you miss the deadline.
Capital gains tax (CGT) on the sale of a rental property is one of the largest single tax liabilities most private landlords will ever face. Yet many landlords remain unclear on the rates, rules, reliefs, and reporting deadlines that apply. This guide explains the complete CGT position for UK resident landlords disposing of residential rental property in 2026, including the rate changes introduced by the October 2024 Budget.
CGT rates on residential property from October 2024
The October 2024 Budget increased the CGT rates on residential property disposals. From 30 October 2024:
- Basic rate taxpayers: 18% on residential property gains (up from 18% on the old lower rate — note this rate was already 18% for residential property; the change was to the higher rate)
- Higher and additional rate taxpayers: 24% on residential property gains (reduced from 28%, which applied from 27 October 2021 to 29 October 2024)
- Rates are on the taxable gain: The taxable gain is your total gain after deducting allowable costs, reliefs (such as PRR), and the annual CGT exemption
- Straddle the basic rate band: If the gain, when added to your other taxable income for the tax year, straddles the basic rate band threshold (£50,270 in 2026/27), the portion falling in the basic rate band is taxed at 18% and the remainder at 24%
- No longer the same as non-residential: Residential property remains subject to different rates from commercial property and other assets, which are charged at 10% (basic rate) and 20% (higher rate) following the October 2024 Budget changes
The 60-day reporting obligation — what you must do
Since April 2020, UK resident individuals must report a disposal of UK residential property and pay any CGT due within 60 days of the completion date. This obligation applies regardless of whether you also need to file a Self Assessment tax return:
- Completion date triggers the clock: The 60-day period starts on the day of completion (legal transfer of ownership) — not exchange of contracts
- Use the UK Property Reporting Service: Report through HMRC's online UK Property Reporting Service (previously called the Real Time Capital Gains Tax service). You need a Government Gateway login
- Estimate if necessary: If you have not yet received all figures for allowable costs, you can file an estimated return within 60 days and amend it later. This avoids the penalty
- Pay the estimated CGT due: Pay the estimated CGT at the time of reporting, even if your annual Self Assessment return is not yet due. You will reconcile the final position in your Self Assessment
- Penalties for late reporting: An automatic £100 penalty applies if the return is filed after 60 days. Further £300 or 5% of tax penalties apply at 6 months and 12 months
- Annual Self Assessment still required: You must also report the disposal in your annual Self Assessment tax return for the relevant tax year. The CGT already paid via the 60-day return is credited against your annual tax liability
Calculating your capital gain
The starting point is to calculate your gross gain before reliefs:
- Sale proceeds: The amount you actually receive (or market value if the sale is to a connected party at less than market value)
- Less: purchase cost: The original price you paid for the property, including any acquisition costs you paid at the time
- Less: SDLT on purchase: The stamp duty land tax (or LBTT in Scotland) you paid when you bought the property is a deductible acquisition cost
- Less: legal and conveyancing fees (purchase and sale): Legal fees on both the purchase and the sale are allowable costs
- Less: estate agent fees on sale: Agency fees and sales costs are allowable deductions against the sale proceeds
- Less: capital improvement costs: The cost of genuine capital improvements (not repairs) to the property during your period of ownership — extensions, loft conversions, new fitted kitchens or bathrooms that enhanced the property. Repair and maintenance costs are not allowable against CGT (they are deductible against rental income instead)
- Result: The gross chargeable gain before any reliefs
Private Residence Relief (PRR) — for properties you once lived in
If you ever lived in the property as your principal private residence (PPR), you may be entitled to PRR, which can significantly reduce or eliminate your CGT liability:
- Full PPR periods are exempt: Any period during which the property was your principal private residence is fully exempt from CGT. The gain attributable to that period is calculated as a proportion of the total ownership period
- Final 9 months of ownership: The final 9 months of ownership are always treated as a period of PPR, regardless of whether you were living there — so long as the property was your PPR at some point
- Lettings relief no longer broadly available: Lettings relief, which used to apply to the let period, was severely restricted from April 2020. It now only applies where the landlord was in shared occupation with the tenant during the letting period
- PPR elections: If you own more than one property, you can elect which is your PPR for a specific period. A valid election must be made within 2 years of acquiring a second property
- Always-rental property: If the property was never your home and was always a pure investment let, PRR is not available and the entire gain is chargeable
Annual CGT exemption — the annual exempt amount
- £3,000 annual exemption (2024/25 and 2026/27): Each individual has an annual CGT exempt amount of £3,000 from 6 April 2024 onwards (reduced from £6,000 in 2023/24 and £12,300 in 2022/23). The annual exemption is deducted from your taxable gain before calculating the CGT
- Cannot be carried forward: Any unused annual exemption in a tax year is lost — it cannot be carried forward to a future year
- Married couples and civil partners: If a property is jointly owned between spouses or civil partners, each owner has their own £3,000 annual exemption, potentially shielding £6,000 of gain in total
- Transfers between spouses: Transfers between spouses or civil partners are made at no gain, no loss — meaning a disposal between spouses does not trigger CGT and the receiving spouse inherits the original acquisition cost
Timing the disposal — tax planning considerations
- Disposal date is completion, not exchange: CGT is triggered at the completion date (legal transfer), not exchange of contracts. This is significant if exchange and completion straddle a tax year-end (5 April) — choosing to complete before or after 5 April determines which tax year's rates and exemptions apply
- Crossing the basic rate band: If your income in the year of disposal is lower (e.g., you retire mid-year, take parental leave, or receive a salary reduction), more of the gain may fall into the basic rate band and be taxed at 18% rather than 24%
- Spreading disposals across tax years: If you are selling multiple properties, disposing of them in different tax years allows each disposal to benefit from the separate annual exemption
- Loss relief: Capital losses from other disposals in the same or earlier tax years can be offset against gains from the rental property disposal, potentially reducing the overall CGT bill
- Death is not a disposal: If you die owning a rental property, death is not a CGT disposal. Your estate inherits the property at its market value at death (CGT 'uplift'). This is why gifting property outright during your lifetime can sometimes be less tax-efficient than leaving it in your will
Practical CGT checklist for landlords disposing of a rental property
- Gather all acquisition costs: Original purchase price, SDLT, legal fees, and all capital improvement costs from date of purchase
- Calculate sale proceeds: Net sale price after deduction of estate agent fees and legal costs
- Apply PRR if eligible: Identify periods of principal private residence occupation and calculate the exempt proportion
- Deduct annual exempt amount: £3,000 per person (£6,000 for jointly-owned properties held by spouses)
- Calculate CGT at 18% or 24%: Determine which rate band applies to your total income plus gain
- Report within 60 days of completion: Use the UK Property Reporting Service and pay the estimated tax due
- Include in Self Assessment: Report the disposal in your annual Self Assessment tax return for the relevant tax year
- Seek professional advice for complex cases: PRR elections, connected-party sales, multiple-property disposals, and inheritance situations all benefit from specialist tax advice