How much Capital Gains Tax will you actually pay when you sell a property in 2026? The quickest way to find out is to follow capital gains tax worked examples that use the current rules. This guide walks through six realistic property scenarios, step by step, using the 2026/27 rates of 18% and 24%, the £3,000 annual exempt amount and the 60-day reporting rule.
Each of these capital gains tax worked examples follows the same method HMRC uses: work out the gain, deduct reliefs and the annual exemption, then split what is left between the 18% and 24% rates according to your unused basic rate band. For the official method, see GOV.UK’s guidance on working out your gain.
Whether you are selling a second home, a buy-to-let or a former main residence, these examples show where the tax comes from and where the savings are.
The Rules Used in These Capital Gains Tax Worked Examples
All of the capital gains tax worked examples below use the following 2026/27 figures:
- Annual exempt amount: £3,000 per person.
- Personal allowance: £12,570 (this applies to income only and cannot be set against gains).
- Basic rate band: £37,700 of taxable income above the personal allowance.
- CGT rates on property: 18% on gains that fall within your unused basic rate band and 24% above it.
- Reporting: UK residential property gains must be reported and paid within 60 days of completion.
Your gain is the sale price minus the purchase price, less allowable costs such as Stamp Duty Land Tax, legal and estate agent fees, and capital improvements like an extension. Ordinary repairs, mortgage interest and like-for-like replacements are not allowable. Our guide to expenses you can deduct lists them in full.
Basic Rate Taxpayer Selling a Second Home
Sarah earns a salary of £30,000. She bought a holiday cottage in 2016 for £180,000, paying £4,500 in Stamp Duty and legal fees. She later added an extension costing £20,000. She sells in August 2026 for £310,000, with £5,500 of estate agent and legal costs.
Work out the gain
£310,000 − £5,500 − £180,000 − £4,500 − £20,000 = £100,000.
Deduct the annual exempt amount
£100,000 − £3,000 = £97,000 taxable gain.
Find the unused basic rate band
Sarah’s taxable income is £30,000 − £12,570 = £17,430. Her unused basic rate band is £37,700 − £17,430 = £20,270.
Apply the rates
£20,270 × 18% = £3,648.60
£76,730 × 24% = £18,415.20
Total CGT: £22,063.80, payable within 60 days of completion.
The large gain pushes most of Sarah’s profit into the 24% band, even though she is a basic rate taxpayer. Read more in our guide for basic rate taxpayers.
Higher Rate Landlord Selling a Buy-to-Let
David is a higher rate taxpayer. He bought a buy-to-let flat in 2012 for £150,000 with £3,000 of purchase costs. In 2019 he converted the loft for £15,000. He replaced the kitchen in 2022 for £9,000. He sells in 2026 for £265,000 with £4,000 of selling costs.
The kitchen replacement was a like-for-like renewal, so it was a revenue repair (deductible against rental income at the time) and is not allowable for CGT. The loft conversion added a new room, so it is a capital improvement.
£265,000 − £4,000 − £150,000 − £3,000 − £15,000 = £93,000 gain
£93,000 − £3,000 = £90,000 taxable
£90,000 × 24% = £21,600 CGT
David has no unused basic rate band, so the whole gain is taxed at 24%. See our article on selling a rental property for more on landlord reliefs.
Former Main Home Let Out (Private Residence Relief)
Priya bought a house on 1 January 2014 for £200,000 (£4,000 purchase costs). She lived there until 31 December 2019, then let it out until she sold it on 31 December 2026 for £420,000 (£6,000 selling costs). She is a higher rate taxpayer.
Work out the total gain
£420,000 − £6,000 − £200,000 − £4,000 = £210,000.
Calculate Private Residence Relief
Total ownership: 156 months. Qualifying months: 72 months of occupation plus the final 9 months of ownership = 81 months.
Private Residence Relief = £210,000 × 81/156 = £109,038.
Find the chargeable gain
£210,000 − £109,038 = £100,962. Lettings relief is not available because Priya did not share occupation with her tenants.
£100,962 − £3,000 = £97,962 taxable
£97,962 × 24% = £23,510.88 CGT
Without Private Residence Relief, the bill would have been more than double. Learn how the relief works in our Private Residence Relief guide.
Married Couple Using Two Allowances
James and Emma are married. James is a higher rate taxpayer. Emma has no income. They sell a second property with an £80,000 gain.
| Scenario | Taxable gain | Rate | CGT payable |
|---|---|---|---|
| Owned by James only | £77,000 | 24% | £18,480 |
| James’s 50% share | £37,000 | 24% | £8,880 |
| Emma’s 50% share | £37,000 | 18% | £6,660 |
| Joint ownership total | £74,000 | Mixed | £15,540 |
Holding the property jointly saves £2,940, because Emma’s annual exemption and her full £37,700 basic rate band are used. Transfers between spouses are on a no gain, no loss basis, but the transfer must be a genuine, outright gift made before contracts are exchanged. See how married couples can share CGT allowances.
Offsetting a Property Loss
Tom, a higher rate taxpayer, sells a flat in 2026/27 at a £25,000 loss after costs. In the same tax year he sells shares at a £40,000 gain.
£40,000 − £25,000 = £15,000 net gain
£15,000 − £3,000 = £12,000 taxable
£12,000 × 24% = £2,880 CGT
Without the loss, Tom would have paid £8,880. Losses must be reported to HMRC within four years of the end of the tax year in which they arise. Our guide to using capital losses explains the rules.
Pension Contribution to Extend the Basic Rate Band
Lucy has taxable income of £30,000 after her personal allowance, leaving £7,700 of basic rate band. Her taxable gain after the annual exemption is £50,000.
Without a pension contribution
£7,700 × 18% = £1,386
£42,300 × 24% = £10,152
Total: £11,538
With a £10,000 gross personal pension contribution
A relief-at-source contribution of £8,000 net (£10,000 gross) extends Lucy’s basic rate band by £10,000.
£17,700 × 18% = £3,186
£32,300 × 24% = £7,752
Total: £10,938
The CGT saving is £600, on top of the tax relief she receives on the pension contribution itself.
Summary of the Six Capital Gains Tax Worked Examples
| Example | Gain | Key factor | CGT payable |
|---|---|---|---|
| Second home, basic rate | £100,000 | Split 18% / 24% | £22,063.80 |
| Buy-to-let, higher rate | £93,000 | All at 24% | £21,600 |
| Former main home | £210,000 | Private Residence Relief | £23,510.88 |
| Married couple | £80,000 | Two allowances and bands | £15,540 |
| Loss offset | £15,000 net | Capital loss | £2,880 |
| Pension contribution | £50,000 taxable | Extended basic rate band | £10,938 |
Getting Your Own CGT Calculation Checked
Real sales are rarely as tidy as these capital gains tax worked examples. Missing improvement receipts, mixed periods of occupation, jointly owned property and gains spread across tax years all change the result. Errors in the 60-day return can lead to penalties and interest. If you are already late, read about missing the 60-day deadline.
Our ACCA-qualified specialists at Capital Gains Tax Experts prepare accurate calculations, claim every relief available and file your UK property return with HMRC on time.
Official guidance: For HMRC’s own rules, see GOV.UK’s guidance on Capital Gains Tax: what you pay it on, rates and allowances, tax when you sell property and reporting and paying Capital Gains Tax.
Frequently Asked Questions
How is capital gains tax worked out on property?
Take the sale price and deduct the purchase price, buying and selling costs and capital improvements to find the gain. Subtract any reliefs and the £3,000 annual exempt amount. The remaining gain is added to your taxable income: the part within your unused basic rate band is taxed at 18% and the rest at 24%.
How does capital gains tax work when selling a house in the UK?
Your main home is usually exempt under Private Residence Relief. A second home, buy-to-let or inherited property is taxable on the gain. For UK residential property, you must report the sale and pay the tax within 60 days of completion through an HMRC UK property account.
What is an example of a capital gains tax calculation?
A higher rate taxpayer buys a flat for £200,000 and sells it for £350,000, paying £10,000 in legal and agent fees. The gain is £140,000. After the £3,000 annual exempt amount, £137,000 is taxed at 24%, giving a Capital Gains Tax bill of £32,880.
Is there an ISA trick for avoiding capital gains tax?
Gains on investments held in an ISA are free from Capital Gains Tax. A “Bed and ISA” moves shares into an ISA by selling and buying them back inside the wrapper, using up to £20,000 of your annual ISA allowance. Property such as a buy-to-let cannot be held in an ISA.
How does HMRC check capital gains?
HMRC matches Land Registry records, information from solicitors and estate agents, share platforms, crypto exchanges and overseas tax authorities using its Connect data system. Where a sale has not been reported, HMRC often sends a “nudge” letter before opening an enquiry, so it is best to report gains correctly and on time.
Conclusion
These capital gains tax worked examples show that the final bill depends on far more than the sale price. Your income level, the costs you can prove, periods of occupation, ownership structure and timing all change how much you pay at 18% and 24%.
With the annual exempt amount fixed at only £3,000, careful planning before you exchange contracts is the most effective way to reduce the tax.
For a personalised calculation, contact our team at Capital Gains Tax Experts. Call us on +44 (0)1204 859315 or try our free CGT calculator to get an instant estimate.
