How much Capital Gains Tax will you pay when selling a buy-to-let property in the UK? In the 2026/27 tax year, gains on residential property are taxed at 18% within your unused basic rate band and 24% above it, after a tax-free annual exempt amount of just £3,000. You must also report and pay the tax within 60 days of completion.
With rental yields under pressure, mortgage interest restrictions and higher rates on property income on the way, many landlords are deciding to sell. The difference between a well-planned and an unplanned sale can easily run into thousands of pounds. For the official rules, see GOV.UK’s guidance on tax when you sell property.
This guide explains the current buy-to-let capital gains tax rates, shows a full worked calculation, and sets out nine legal strategies to reduce the bill.
Buy-to-Let Capital Gains Tax Rates for 2026/27
Since 30 October 2024, the same rates apply to residential property and other assets. When selling a buy-to-let property in 2026/27, the rates are:
| Taxpayer position | Rate on gain | Notes |
|---|---|---|
| Within unused basic rate band | 18% | Basic rate band is £37,700 of taxable income |
| Above the basic rate band | 24% | Applies to higher and additional rate taxpayers |
| Trustees and personal representatives | 24% | Subject to a reduced trust annual exemption |
| Annual exempt amount | £3,000 | Per individual, cannot be carried forward |
Your gain is added on top of your taxable income for the year to decide how much falls into each band. A large gain will push most landlords into the 24% rate, even if their salary is modest. See Capital Gains Tax rates for 2026/27 for the full picture.
How the Gain Is Calculated When Selling a Buy-to-Let Property
The chargeable gain is the sale price minus the original purchase price, less allowable costs. Allowable costs when selling a buy-to-let property include:
- Acquisition costs: Stamp Duty Land Tax, solicitor and survey fees paid when you bought.
- Disposal costs: estate agent fees, conveyancing and the cost of an Energy Performance Certificate.
- Capital improvements: extensions, loft conversions, new conservatories and other work that adds value and is still reflected in the property at sale.
Costs that are not allowable include mortgage interest, mortgage arrangement and redemption fees, routine repairs, and like-for-like replacements that were already claimed against rental income. See our guide to improvement costs and Capital Gains Tax.
Worked Example – Higher Rate Landlord
Mark is a higher rate taxpayer. He bought a two-bedroom flat in 2010 for £160,000, paying £3,500 in purchase costs. He spent £12,000 on a rear extension in 2015. He completes the sale in September 2026 for £290,000, with £4,500 of selling costs.
Step 1: Calculate the gain
£290,000 − £4,500 − £160,000 − £3,500 − £12,000 = £110,000.
Step 2: Deduct the annual exempt amount
£110,000 − £3,000 = £107,000.
Step 3: Apply the rate
Mark has no unused basic rate band, so the whole amount is taxed at 24%: £107,000 × 24% = £25,680.
Step 4: Report and pay
Mark must file a UK property return and pay £25,680 within 60 days of the September completion date. He must also include the gain on his self assessment return for 2026/27. Read how to report UK property CGT in 60 days.
9 Strategies to Reduce CGT When Selling a Buy-to-Let Property
These are the main legal ways landlords reduce Capital Gains Tax. Each depends on your circumstances, so take advice before acting.
1. Transfer a share to your spouse or civil partner
Transfers between spouses are made on a no gain, no loss basis. Moving part of the property to a spouse with a lower income before exchange can use their £3,000 annual exemption and their unused basic rate band at 18%. The transfer must be genuine and outright. See how married couples share CGT allowances.
2. Time the sale for a low-income tax year
If you are retiring, taking a career break or expect lower income next year, completing the sale in that tax year can leave more of your basic rate band available for gains at 18%. CGT is based on the exchange date, so plan contracts around 5 April.
3. Make a personal pension contribution
Gross personal pension contributions extend your basic rate band. A £10,000 gross contribution can move £10,000 of gain from 24% to 18%, saving £600 in CGT on top of income tax relief.
4. Claim every allowable cost
Missing receipts for extensions or purchase fees are one of the most common reasons landlords overpay. Gather records early, including bank statements and builders’ invoices.
5. Use capital losses
Losses from shares, other property or earlier years reduce your gain. Unused losses must have been reported to HMRC within four years. See using capital losses to reduce CGT.
6. Claim Private Residence Relief if you lived there
If the buy-to-let was once your main home, the period you lived there plus the final nine months of ownership are exempt. Read what Private Residence Relief covers.
7. Check whether lettings relief applies
Since April 2020, lettings relief is only available where you shared occupation of the property with your tenant. It is worth up to £40,000 per person where it applies. See lettings relief eligibility.
8. Defer the gain with EIS investment
Reinvesting the gain into qualifying Enterprise Investment Scheme shares within the permitted period defers the CGT until the shares are sold. EIS shares are high-risk investments and need specialist advice.
9. Consider incorporation carefully
Transferring a portfolio into a limited company is normally a disposal at market value. Incorporation relief can defer the gain, but only where the letting activity amounts to a genuine business. Stamp Duty Land Tax may also apply, so this route suits larger portfolios rather than a single flat.
What Has Changed for Landlords Selling in 2026
Several recent changes affect landlords who are selling a buy-to-let property:
- Higher rates since October 2024: the old 28% rate for higher rate taxpayers became 24%, but the same rate now applies to shares and other assets.
- Furnished holiday lettings regime abolished: from April 2025, furnished holiday lets are treated like other residential lets and no longer qualify for Business Asset Disposal Relief.
- Annual exempt amount frozen at £3,000: down from £12,300 in 2022/23.
- Rising property income tax: higher rates on property income are planned from April 2027, which is prompting some landlords to review whether to sell or hold.
Selling Versus Holding – Key Considerations
| Option | CGT position | Other considerations |
|---|---|---|
| Sell now | CGT at 18% / 24% within 60 days | Removes rental income tax and mortgage risk |
| Sell in a lower-income year | More of the gain at 18% | Depends on reliable income forecasting |
| Gift to children | Treated as a sale at market value | CGT due with no sale proceeds to pay it |
| Hold until death | Gain wiped out by uplift on death | Inheritance Tax may apply at 40% |
Gifting a buy-to-let does not avoid the tax, because it is a disposal at market value. Our article on gifting property and Capital Gains Tax explains why.
Getting Specialist Help Before Selling a Buy-to-Let Property
The best time to plan is before contracts are exchanged. Once exchange happens, most planning options, such as spousal transfers and timing, are no longer available.
Our ACCA-qualified team at Capital Gains Tax Experts works with landlords across the UK. We calculate the gain, identify every relief, model the effect of spousal transfers and pension contributions, and file your 60-day return with HMRC.
Official guidance: For HMRC’s own rules, see GOV.UK’s guidance on Capital Gains Tax: what you pay it on, rates and allowances, reporting and paying Capital Gains Tax and tax when you sell your home.
Frequently Asked Questions
What is the CGT rate when selling a buy-to-let property in 2026?
Gains are taxed at 18% within your unused basic rate band and 24% above it, after deducting the £3,000 annual exempt amount.
Can I deduct mortgage interest from my buy-to-let gain?
No. Mortgage interest and mortgage fees are not allowable costs for Capital Gains Tax. Only acquisition costs, selling costs and capital improvements reduce the gain.
How long do I have to pay CGT on a buy-to-let sale?
You must report the sale and pay the tax within 60 days of completion through an HMRC UK property account.
Can I avoid CGT by putting my buy-to-let in my spouse’s name?
A transfer to a spouse does not avoid CGT entirely, but it can reduce it by using their annual exemption and unused basic rate band. The transfer must be completed before exchange.
Is lettings relief still available?
Only where you shared occupation of the property with your tenant. Most landlords letting a whole property no longer qualify.
Conclusion
Selling a buy-to-let property in 2026/27 can produce a substantial tax bill, with rates of 18% and 24% and only £3,000 of tax-free gains. The 60-day payment deadline means you need to know the figure before you complete.
Spousal transfers, careful timing, pension contributions, losses and full use of allowable costs can all reduce what you pay, but most of these steps must happen before contracts are exchanged.
If you are thinking about selling a rental property, contact our team at Capital Gains Tax Experts for a fixed-fee review. Call us on +44 (0)1204 859315 or try our free CGT calculator to get an instant estimate.
