Capital Gains Tax on Property UK 2025 | Complete Guide & Calculator
Complete guide to capital gains tax on property in the UK. Rates, calculations, exemptions, reliefs and tax planning strategies for 2025. Free CGT calculator included.
Moving Specialist
Quick Navigation
CGT Fundamentals
Exemptions & Reliefs
Advanced Strategies
💰 Capital Gains Tax Overview
Capital Gains Tax (CGT) on property can significantly impact your profits from property sales. Understanding rates, exemptions, and strategies helps you plan effectively and minimise your tax liability legally.
What is Capital Gains Tax on Property?
Capital Gains Tax (CGT) is a tax on the profit you make when you sell a property for more than you paid for it. The tax applies to the gain (profit) rather than the total sale price, and various reliefs and exemptions can reduce or eliminate your liability.
📊 UK Capital Gains Tax Statistics 2025
When Does CGT Apply to Property?
🏠 Property Types Subject to CGT
💸 CGT Usually Applies
- • Second homes and holiday properties
- • Buy-to-let investment properties
- • Commercial properties
- • Properties inherited and then sold
- • Former main residences (after 9 months)
- • Properties bought specifically to sell
✅ CGT Usually Exempt
- • Your main residence (Principal Residence Relief)
- • Properties sold for less than purchase price
- • Gains under annual exemption threshold
- • Properties transferred between spouses
- • Properties sold to registered charities
- • Agricultural land qualifying for relief
Property CGT Rates 2025
CGT rates on property are higher than other assets, reflecting the government's approach to residential property investment. Your rate depends on your total income and whether you're a basic or higher rate taxpayer.
📈 Current CGT Rates on Property
Basic Rate Taxpayers (18%)
If your total income plus capital gains is within the basic rate band
- • Income up to £37,700 (2024/25)
- • 18% on property gains above annual exemption
- • Lower rate encourages property investment
- • Example: £10,000 gain = £1,800 tax (after exemption)
Higher/Additional Rate Taxpayers (28%)
If your total income plus capital gains exceeds the basic rate band
- • Income over £37,700 (2024/25)
- • 28% on property gains above annual exemption
- • Highest CGT rate in the UK
- • Example: £50,000 gain = £14,000 tax (after exemption)
Annual Exemption and Thresholds
📉 Reducing Annual Exemption
The CGT annual exemption has reduced significantly: £12,300 (2022/23), £6,000 (2023/24), and £3,000 from 2024/25 onwards. This means smaller gains now trigger CGT liability.
CGT Calculation Formula
Calculating CGT involves several steps and allowable deductions. Understanding the calculation helps you plan property sales effectively and identify opportunities for tax efficiency.
🧮 Step-by-Step CGT Calculation
Sale Proceeds
Total amount received from property sale (minus selling costs)
Allowable Costs
Purchase price + improvement costs + buying/selling expenses
Total Gain
Gross capital gain before reliefs and exemptions
Reliefs & Exemptions
Annual exemption + Principal Residence Relief + other reliefs
Taxable Gain
Final amount subject to CGT at 18% or 28%
🧮 Capital Gains Tax Calculator
Property Sale Details
Estate agent fees, legal fees, etc.
Stamp duty, legal fees, surveys
Capital improvements, extensions
Calculation Results
Calculation Breakdown
Acquisition Costs
Capital Gains Tax
Amount you'll receive after paying CGT
Tax Rate Applied: 28% (Higher/Additional Rate)
Rate depends on your total income for the tax year
Important: This calculator provides estimates for guidance only. Actual CGT calculations may involve additional factors like reliefs, prior year losses, or complex ownership structures. Consult a tax professional for definitive advice.
Allowable Costs and Expenses
💡 Deductible Expenses
✅ Allowable Costs
- • Original purchase price
- • Stamp duty and legal fees (buying)
- • Estate agent and legal fees (selling)
- • Capital improvements and extensions
- • Professional valuation costs
- • Advertising costs for sale
❌ Non-Allowable Costs
- • Routine maintenance and repairs
- • Mortgage interest payments
- • Insurance premiums
- • Utility bills and council tax
- • Decorating costs (unless major refurbishment)
- • General running costs
Principal Residence Relief (PRR)
Principal Residence Relief is the most valuable CGT exemption for homeowners, potentially saving tens of thousands of pounds. Understanding how it works ensures you maximise your entitlement.
🏠 Main Residence Exemption
If you've lived in your property as your only or main residence throughout ownership, the entire gain is usually exempt from CGT. This relief can save £100,000+ on expensive properties.
PRR Qualifying Conditions
✅ PRR Requirements
Only or Main Residence
- • Must be your primary place of residence
- • Only one property can qualify at any time
- • Must actually live in the property (not just own it)
- • Election required if you own multiple homes
Period of Occupation
- • Full relief if occupied throughout ownership
- • Partial relief for periods of non-occupation
- • Last 9 months always qualify (regardless of occupation)
- • Up to 4 years for work-related absence
Letting Relief and Mixed Use Properties
Letting Relief provides CGT reduction for homeowners who rent out their main residence. Although significantly reduced since 2020, it still offers valuable savings for qualifying properties.
🏠 Letting Relief Eligibility 2025
Current Rules (Post-2020)
- • Only available if you share occupancy with tenants
- • Property must remain your main residence
- • Maximum relief: £40,000 per person
- • Must qualify for Principal Residence Relief first
Legacy Relief (Pre-2020 Sales)
- • Available for former main residences rented out
- • Properties sold before April 2020 qualify
- • Relief available even if moved out completely
- • More generous eligibility criteria
Annual Exemption and Timing Strategies
The annual CGT exemption allows you to realise gains tax-free each year. Strategic timing of property sales can significantly reduce your overall tax liability.
📅 Annual Exemption Amounts
Tax Minimisation Strategies
Legal strategies can significantly reduce your CGT liability. Understanding these approaches helps you structure property transactions efficiently and retain more of your gains.
💡 CGT Reduction Strategies
Timing Strategies
- • Spread sales across multiple tax years to use annual exemptions
- • Consider partial disposal if property can be subdivided
- • Time completion to optimise tax year of disposal
- • Defer consideration to spread liability
Ownership Strategies
- • Transfer property to spouse to utilise their annual exemption
- • Consider joint ownership to double annual exemptions
- • Gift property to utilise recipient's basic rate band
- • Holdover relief for business property transfers
Cost Optimisation
- • Maximise allowable expenses and improvement costs
- • Keep detailed records of all property-related expenses
- • Consider property valuations at key dates
- • Professional advice for complex situations
Reporting and Payment Requirements
CGT reporting has strict deadlines and penalties for late submission. Understanding requirements ensures compliance and avoids unnecessary charges.
⏰ Critical Deadline: 60 Days
You must report and pay CGT within 60 days of completion using HMRC's online reporting service. This applies even if you normally don't complete Self Assessment returns. Late payment incurs interest and penalties.
📋 Reporting Timeline
Online Reporting Service
Report disposal and pay CGT via gov.uk within 60 days of completion
Self Assessment Return
Include disposal details in annual Self Assessment by 31st January
CGT Calculation Example
📊 Worked Example: Second Home Sale
When to Seek Professional Advice
Complex property transactions, large gains, or unclear circumstances warrant professional tax advice. Expert guidance ensures compliance and optimal tax efficiency.
🎯 Professional Advice Triggers
⚠️ Complex Situations
- • Mixed residential/commercial properties
- • Properties held in trusts or companies
- • Overseas property transactions
- • Non-resident sellers
- • Substantial capital gains (£100,000+)
💡 Planning Opportunities
- • Multiple property portfolio restructuring
- • Inheritance tax planning integration
- • Business property relief strategies
- • Rollover relief opportunities
- • Gift hold-over relief planning
💰 Ready to Optimise Your Property Tax Strategy?
Our tax specialists help property investors and homeowners navigate capital gains tax efficiently. From compliance to strategic planning, we ensure you retain maximum value from your property transactions. Learn about moving costs and stamp duty implications. Get expert tax advice for your property transactions.
Need Expert Tax Guidance?
Get professional advice on capital gains tax planning and property transactions. Our specialists help minimise your tax liability legally and effectively.
Trusted by 10,000+ homeowners
