If you’re planning to sell a buy-to-let property, second home, holiday home or investment property, it’s important to understand how Capital Gains Tax (CGT) works. Failing to plan ahead could result in an unexpected tax bill, while proper tax planning may help you reduce the amount you owe.
In this guide, the tax experts at King & Taylor explain the latest Capital Gains Tax rates for 2026, the current allowances available, and practical ways to reduce your Capital Gains Tax liability.
What Is Capital Gains Tax?
Capital Gains Tax is a tax paid on the profit you make when selling or disposing of an asset that has increased in value. When it comes to property, CGT is most commonly paid on:
- Buy-to-let properties
- Holiday homes
- Second homes
- Investment properties
- Property inherited and later sold
It’s important to note that in most cases, your main residence is exempt from Capital Gains Tax through Private Residence Relief.
Can I Avoid Capital Gains Tax on My Buy-to-Let Property?
In most cases, you cannot completely avoid Capital Gains Tax when selling a buy-to-let property if it has increased in value. However, there are several legitimate ways to reduce the amount of tax you pay. These may include using your annual Capital Gains Tax allowance, offsetting capital losses, claiming allowable expenses and improvement costs, or transferring ownership to a spouse before the sale. Every situation is different, so it’s important to seek professional advice before selling. The team at King & Taylor can help you explore the available tax reliefs and ensure you’re not paying more Capital Gains Tax than necessary.
You can find out more information from our UK Property Tax Calculator here.
Do You Pay Capital Gains Tax When Selling a House?
It depends on the property.
If the property has been your only or main residence throughout your ownership, you will generally not pay Capital Gains Tax.
However, you may need to pay CGT if you are selling:
- A buy-to-let property
- A second home
- A holiday property
- A property that has not always been your main residence
- A property that has significantly increased in value
If you’re unsure whether Capital Gains Tax applies to your situation, King & Taylor can provide expert advice and calculate your potential tax liability before you sell.
Capital Gains Tax Rates on Property in 2026
For the 2026/27 tax year, the Capital Gains Tax rates on residential property are:
| Taxpayer | CGT Rate |
|---|---|
| Basic Rate Taxpayer | 18% |
| Higher or Additional Rate Taxpayer | 24% |
The rate you pay depends on your taxable income and the size of your gain. In some cases, a gain may fall partly within the basic rate band and partly within the higher rate band.
What Is the Capital Gains Tax Allowance for 2026?
Every individual receives an Annual Exempt Amount, which allows a portion of gains to be realised tax-free.
For the 2026/27 tax year, the Capital Gains Tax allowance is:
£3,000 per person
This means only gains above this threshold are potentially taxable. The allowance cannot be carried forward to future tax years if unused.
How to Calculate Capital Gains Tax on Property
The basic calculation is:
Sale Price
minus
Purchase Price
minus
Allowable Costs
minus
Capital Improvements
minus
Capital Gains Tax Allowance
= Taxable Gain
Allowable costs may include:
- Solicitor fees
- Estate agent fees
- Stamp Duty paid when purchasing the property
- Survey costs
- Costs of major improvements
For example:
Purchase Price: £200,000
Sale Price: £300,000
Gain: £100,000
Allowable Costs: £10,000
Adjusted Gain: £90,000
Less CGT Allowance: £3,000
Taxable Gain: £87,000
The applicable CGT rate would then be applied to determine the tax due.
Capital Gains Tax on Buy-to-Let Properties
One of the most common reasons landlords contact King & Taylor is to understand the tax implications of selling a rental property.
When selling a buy-to-let property, you may be able to deduct:
- Purchase costs
- Selling costs
- Certain improvement costs
- Previous capital losses
However, many landlords are surprised by the size of their Capital Gains Tax bill because property values have increased substantially over time.
Seeking professional advice before the sale completes can often create opportunities to reduce your tax liability.
7 Ways to Reduce Your Capital Gains Tax Bill
1. Use Your Annual Allowance
Every taxpayer receives a £3,000 CGT allowance each year. Making use of this allowance can reduce the amount of tax payable.
2. Transfer Assets Between Spouses
Married couples and civil partners can often transfer assets between each other without triggering Capital Gains Tax.
This can allow both individuals to utilise their annual allowances and potentially lower tax rates.
3. Offset Capital Losses
If you’ve made losses on other investments, these may be used to reduce your taxable gains.
4. Keep Records of Improvement Costs
Many property owners forget to include qualifying improvement works.
Extensions, conversions and major renovations may help reduce your taxable gain.
5. Consider Timing the Sale
Selling assets across different tax years may allow you to utilise multiple annual allowances.
6. Claim Available Reliefs
Depending on your circumstances, reliefs such as Private Residence Relief may apply.
7. Seek Professional Tax Advice Before Selling
The biggest savings often come from planning before contracts are exchanged.
At King & Taylor, we regularly help property owners and landlords structure disposals in the most tax-efficient way possible.
How Long Do You Have to Report Capital Gains Tax?
If Capital Gains Tax is due on the sale of UK residential property, it must generally be reported and paid within 60 days of completion. Missing the deadline can result in penalties and interest charges.
Why Speak to King & Taylor?
Capital Gains Tax calculations can quickly become complicated, particularly when multiple properties, periods of rental use, inherited assets or partial ownership are involved.
At King & Taylor, our experienced accountants help individuals, landlords and property investors across Kent and the South East understand their Capital Gains Tax position and identify legitimate ways to reduce their tax bill.
Whether you’re planning to sell a buy-to-let property, transfer ownership to a spouse or simply want to understand your potential tax liability, our team can provide clear, practical advice tailored to your circumstances.
Contact King & Taylor
Thinking about selling a property?
Before you do, speak to the team at King & Taylor. We can calculate your potential Capital Gains Tax liability, identify available reliefs and help ensure you don’t pay more tax than necessary.
Contact King & Taylor today to arrange a consultation with one of our experienced tax advisers.
