Capital Gains Tax on a Second Home 2026/27: Rates, Examples and the 60-Day Rule

CGT Rates on Residential Property in 2026/27

Since the Autumn Budget of October 2024, residential property gains (other than your main home) are charged at 18% for gains within the basic-rate band and 24% for gains in the higher-rate band. These rates replaced the previous rates of 18% and 28%. The change took effect for disposals on or after 30 October 2024. For 2026/27, all second home disposals use the 18%/24% rate structure.

The annual exempt amount of £3,000 is available to offset the gain. If you have capital losses from other disposals in the same or earlier tax years, these are applied first to reduce the gain. The net taxable gain is then assessed against your income to determine how much falls into each CGT band.

Calculating the Gain

The gain is calculated as sale proceeds minus allowable costs. Allowable costs include the purchase price, buying costs (solicitor fees, stamp duty, surveyor fees), any capital improvements (extensions, loft conversions, not maintenance or repairs), and selling costs (estate agent fees, solicitor fees). Costs of maintaining or decorating the property are not allowable for CGT purposes.

For example: a second home bought for £250,000 with £5,000 of purchase costs, £30,000 spent on an extension, and sold for £380,000 with £7,500 in selling costs. Gain = £380,000 − £250,000 − £5,000 − £30,000 − £7,500 = £87,500. After the £3,000 annual exempt amount: taxable gain = £84,500. For a higher-rate taxpayer (salary of £60,000), all of this would be charged at 24% = £20,280.

The 60-Day Reporting Rule

If you sell a UK residential property and owe CGT, you must report the gain and pay an estimate of the tax within 60 days of the completion date. This is done through HMRC's online residential property disposal service, separate from the annual Self Assessment process. Failure to report within 60 days can result in a penalty and interest charges.

The 60-day rule applies to UK residential property only. Non-residential property gains and other asset gains (shares, crypto, etc.) are reported through Self Assessment as normal, by 31 January following the end of the tax year. If you have already paid CGT under the 60-day rule, you will reconcile this against your Self Assessment return, but you do not need to wait until January, the initial payment is due within 60 days of completion.

The 60-day clock starts from the completion date, not the exchange of contracts date. If you exchange in March and complete in April, the 60-day clock starts in April. A common mistake is assuming that reporting through Self Assessment before 31 January satisfies the obligation, it does not if the 60-day deadline has already passed.

Private Residence Relief and Its Limits

Private Residence Relief (PRR) exempts the gain on your main home from CGT. If you sell a property that was your main home for part of the ownership period, you may be entitled to partial PRR. The gain is apportioned across the ownership period, and the proportion relating to the time it was your main home is exempt. The final 9 months of ownership always count as main home periods, even if you had moved out.

For a pure second home that was never your main residence, PRR is not available. The full gain (less costs and the annual exempt amount) is subject to CGT. Furnished holiday lettings used to have specific tax advantages, but significant changes to FHL rules took effect from April 2025, removing the historic CGT and income tax advantages. If you have an FHL property, you should check the current rules carefully.