When you sell a buy-to-let property, capital gains tax applies to the profit above your base cost after deducting allowable costs and the £3,000 annual exempt amount. This guide explains how the CGT calculation works, what costs count and the 60-day reporting rule.
Published by the UK Money Calculators editorial team. Last updated for the 2026/27 tax year.
A buy-to-let property is not your main home, so it does not qualify for Private Residence Relief. That means CGT can apply to the full gain from purchase to sale — subject to allowable deductions and the annual exempt amount.
The gain is calculated as: sale proceeds minus your original purchase cost, minus allowable buying costs, minus allowable selling costs, minus any capital improvement costs.
Routine maintenance and repairs — painting, fixing a boiler, replacing a broken window — are not allowable capital costs for CGT. They may have been deductible against rental income in the year incurred, but they do not reduce your CGT gain.
James bought a flat in 2015 for £180,000 plus £5,000 in stamp duty and legal fees at purchase. He spent £5,000 on a refurbishment that qualifies as capital improvement. In 2026 he sells for £240,000, paying £10,000 in estate agent and solicitor fees.
The rate depends on James's taxable income in the year of disposal. If his taxable income is £40,000, he has used all of his basic-rate band (£37,700). The full £37,000 gain is taxed at 24%, giving CGT of £8,880.
If his taxable income were only £30,000, he would have £7,700 of basic-rate band remaining. The first £7,700 of gain is taxed at 18% (£1,386) and the remaining £29,300 at 24% (£7,032) — total CGT of £8,418.
A common misconception is that your outstanding mortgage balance reduces the CGT gain. It does not. CGT is calculated on the difference between sale proceeds and your base cost — the mortgage is a financing arrangement between you and your lender, not a cost of acquiring or disposing of the asset for tax purposes.
Equally, mortgage interest payments are not an allowable deduction against the CGT gain (though they may have been allowable against rental income, subject to the finance cost restrictions introduced from 2017).
Since April 2020, if you sell a UK residential property and CGT is due, you must report the gain and pay the estimated tax to HMRC within 60 days of completion. This applies even if you are already registered for Self Assessment.
You report via HMRC's online "Report and pay CGT on UK property" service (separate from Self Assessment).
You still need to include the disposal on your Self Assessment return for the relevant tax year — the 60-day payment is a payment on account. If no CGT is due (because the gain is covered by the annual exempt amount or losses), you may not need to report via the 60-day service, but check the GOV.UK guidance for your specific circumstances.
Estimate your buy-to-let CGT
Enter your purchase cost, selling costs and income to get a CGT estimate using 2026/27 rates.
Open the CGT calculatorThe rates are the same — 18% and 24% for 2026/27. However, there is a key practical difference: when selling UK residential property with a CGT liability, you must report and pay within 60 days of completion. Share disposals are reported through Self Assessment by 31 January following the tax year.
No. The CGT gain is the difference between your sale proceeds and your allowable costs (purchase price, buying costs, capital improvements, selling costs). Your mortgage balance is irrelevant to the CGT calculation — it is a debt, not a cost of the asset.
Improvements that genuinely add to the value or extend the nature of the asset: an extension, a loft conversion, a new room, or a significant structural upgrade. Like-for-like repairs and maintenance — replacing a broken boiler with an equivalent model, repainting, fixing gutters — are revenue costs, not capital, and cannot be deducted from the CGT gain.
If you sell a UK residential property and a CGT liability arises, you must report within 60 days. If the gain is fully covered by the annual exempt amount or capital losses so no tax is due, you may not need to file via the 60-day service — but check current GOV.UK guidance, as the rules depend on your total proceeds relative to four times the annual exempt amount.
Yes. Solicitor fees, stamp duty and survey costs paid when you acquired the property are allowable buying costs. These are added to your base cost and reduce the gain. Keep receipts and records from when you originally bought the property.
This page is for general information only and is not financial, tax or legal advice. Consult a qualified tax adviser or accountant before making decisions about a property disposal.