CGT on second home calculator: 2026/27

CGT on Second Home 2026/27: Buy-to-Let and Holiday Home Capital Gains

Capital Gains Tax on UK second homes, buy-to-let property and holiday homes in 2026/27. Current residential rates 18% basic / 24% higher (28% rate abolished October 2024), £3,000 annual exempt amount, Private Residence Relief mechanics, Lettings Relief restriction post-April 2020, 60-day reporting via UK Property Disposal account, joint-ownership splitting to use 2× AEA, 4 worked scenarios from £80k BTL gain to £540k luxury second-home exit.

Key 2026/27 CGT rates and allowances

Basic-rate band gain

18%

Within unused income-tax basic-rate band (£50,270 ceiling)

Higher-rate band gain

24%

Above £50,270 basic-rate ceiling (was 28% before Oct 2024)

Annual Exempt Amount

£3,000

Per person per year, frozen through April 2030 (was £12,300 in 2022/23)

4 worked CGT scenarios

Scenario	Purchase / sale	Gross gain	PRR	Taxable	CGT	Effective rate
BTL flat, basic-rate landlord, sole owner Pure BTL — never lived in. No PRR. £63k taxable gain, £3k AEA.	Buy £200,000 Sell £280,000 Costs £17,000	£63,000	£0	£63,000	£10,800	17.1%
Holiday home, higher-rate owner, joint Joint ownership — each spouse gets own £3k AEA. £120k gain split £60k each.	Buy £350,000 Sell £500,000 Costs £30,000	£120,000	£0	£120,000	£27,360	22.8%
Former main home, then BTL, higher-rate 6 of 12 years was main home + 9 months final-period relief. PRR covers ~56%.	Buy £250,000 Sell £600,000 Costs £40,000	£310,000	£174,375	£135,625	£31,830	10.3%
Large gain, higher-rate, sole owner Big BTL exit — £540k taxable, £3k AEA, all at 24% higher rate.	Buy £500,000 Sell £1,100,000 Costs £60,000	£540,000	£0	£540,000	£128,880	23.9%

How the CGT calculation works

Gross gain = Sale price - Purchase price - Allowable costs (legal fees, agent fees, SDLT, surveyor) - Capital improvements (extensions, loft conversion). Routine repairs and redecoration are NOT deductible (they're rental-income revenue items).
Private Residence Relief = Gross gain × (PRR period + 9-month final period) / Total ownership period. PRR applies for any period the property was your only / main residence. The final 9 months always count if you ever lived there.
Taxable gain = Gross gain - PRR amount.
Per-owner split = Taxable gain / number of owners (sole 1, joint 2). Tenants-in-common can have uneven shares (e.g. 90:10) reported via Form 17.
Apply AEA = Per-owner gain - £3,000. Each owner has their own £3,000.
Apply rate: 18% on the portion in basic-rate band (unused part of £50,270 income-tax ceiling), 24% above. Higher-rate taxpayers pay 24% on the whole amount.
Report within 60 days via UK Property Disposal online service. Penalties: £100 + £10/day after 3 months + 5% of tax due at 6 / 12 months.

Private Residence Relief — the key relief

For a property that WAS your main home at some point, PRR can dramatically reduce the taxable gain. The formula is:

PRR amount = Gross gain × (PRR years + 0.75) / Total ownership years

The 0.75 (9 months) is the "final period exemption" — automatically PRR-eligible if you ever lived in the property as main home, even if you've since moved out. Reduced from 36 months pre-April 2014 to 18 months April 2014-April 2020 to 9 months from April 2020 (extended to 36 months only for moves into a care home or for disabled persons under specific conditions).

Worked example: bought 1 January 2014, lived in it as main home 6 years until 31 December 2019, then BTL for 6 years until sold 1 January 2026. Total ownership 12 years. PRR period = 6 + 0.75 = 6.75 years. PRR fraction = 6.75 / 12 = 56.25%. Gain of £350,000 → £196,875 PRR-exempt, £153,125 taxable, then AEA + rates apply.

60-day reporting requirement

Since April 2020, CGT on UK residential property disposals MUST be reported AND paid within 60 days of completion via HMRC's online UK Property Disposal service. Separate from your annual Self Assessment return — you still also report the gain on your year-end SA return with any reconciliation done there.

The 60-day clock starts the day AFTER completion, not exchange. Sale completes Tuesday 1 December 2026 → report and pay by Friday 30 January 2027. For jointly-owned property, EACH owner must file their own return separately — there is no joint filing. The service is at gov.uk/report-and-pay-your-capital-gains-tax. Penalties for missing the 60-day deadline: £100 fixed + £10/day after 3 months + 5% of tax due at 6 and 12 months — these stack and can quickly exceed the original tax owed on smaller gains.

Joint ownership — using 2 AEAs and 2 basic-rate bands

Joint-name ownership splits the gain between owners. Each gets their own £3,000 AEA and their own basic-rate band headroom. A married couple selling a jointly-owned BTL with a £100,000 gross gain at higher-rate band: split £50,000 each, each gets £3,000 AEA → £47,000 taxable each → at 24% = £11,280 each → total £22,560. Sole ownership of the same property: £100,000 - £3,000 AEA = £97,000 → at 24% = £23,280. Saving from joint ownership: £720 in this case (small but free).

The saving is much larger if one spouse is basic-rate and the other higher-rate: the basic-rate spouse pays 18% on their share within their unused basic-rate band. Inter-spouse transfers to set up joint ownership are at no-gain-no-loss (Section 58 TCGA 1992). Must happen BEFORE exchange of contracts on sale. Land Registry TR1 form, ~£40-60 fee. Tenants-in-common with uneven shares (e.g. 99:1 favouring the basic-rate spouse) is legally enforceable and HMRC-acceptable if documented via Form 17 trust deed.

Frequently asked questions

What rate of CGT do I pay on a second home in 2026/27?

Two rates depending on where the gain stacks into your income. 18% on the portion of the gain that falls within your unused basic-rate band (£12,570 + £37,700 = £50,270 income-tax basic rate ceiling). 24% on the portion above that. Worked example: salary £45,000, sole-owner property gain £80,000 after £3,000 AEA = £77,000 taxable. £5,270 unused basic-rate band (£50,270 - £45,000) gets the 18% rate (£948 tax); £71,730 in higher-rate band gets 24% (£17,215 tax); total CGT £18,163. The 28% residential rate that existed before October 2024 was abolished by the Autumn Budget 2024 — the rate has been 18/24 since then. These are the rates set in Section 4 TCGA 1992 as amended by Finance Act 2024.

What is the £3,000 annual exempt amount?

The £3,000 Annual Exempt Amount (AEA) is the slice of capital gains you can realise each tax year before paying any CGT. It applies to gains from ALL asset types combined - shares, crypto, property, business assets - not £3,000 per asset. Cut from £12,300 (2022/23) to £6,000 (2023/24) to £3,000 (2024/25 onwards), held at £3,000 through April 2030. Each individual gets their own £3,000 - so a couple selling a jointly-owned property gets £6,000 combined AEA. If you don't use it in a tax year, it's lost (no carry-forward). Crystallising small gains each year up to £3,000 is the simplest way to use it — the "Bed and ISA" or "Bed and Spouse" patterns formalise this for share portfolios.

What is Private Residence Relief (PRR) and when does it apply?

PRR exempts gains arising during periods when the property was your only or main residence (Section 222-226A TCGA 1992). The relief is FRACTIONAL — gain × (PRR period + 9-month final period) / total ownership period. The final 9 months of ownership are ALWAYS treated as PRR-eligible IF the property was your main home at some point, even if you've moved out. Worked example: bought 1 January 2014, lived in it as main home until 31 December 2019 (6 years), then BTL until sold 1 January 2026 (6 years rental). Total ownership 12 years. PRR period = 6 years + 9 months = 6.75 years. PRR fraction = 6.75 / 12 = 56.25%. Gain of £350,000 → £196,875 PRR-exempt, £153,125 taxable. No PRR available for a property never lived in (pure BTL or investment).

What happened to Lettings Relief?

Lettings Relief was DRAMATICALLY restricted from April 2020 (Finance Act 2019 Section 41). Before April 2020: up to £40,000 of additional relief was available if the property was your main home AND then let out. From April 2020: Lettings Relief is only available where the owner shared the property as their main home with the tenant simultaneously - so traditional "let-out former home" arrangements lost the relief entirely. Most landlords selling a former main home now get only PRR + 9-month final-period, and nothing else. This is the single most punitive recent CGT change for accidental landlords. The pre-April-2020 rules CAN still apply where the disposal is for a property held under contracts that pre-date the change in specific historical circumstances (rare).

I need to report the disposal within 60 days - what is the UK Property account?

From April 2020 (Finance Act 2019), CGT on UK residential property disposals must be reported AND paid within 60 days of completion via the HMRC "UK Property Disposal" online service (also called "Property Account" or "CGT on Property" service). This is a separate filing from Self Assessment - you still also report the gain on your SA return at year-end, with any over- or under-payment reconciled there. Filing is online at gov.uk/report-and-pay-your-capital-gains-tax. Penalties for missing the 60-day deadline: £100 fixed penalty + £10/day after 3 months + 5% of tax due after 6 months and again after 12 months. The 60-day window does NOT apply to non-resident disposals (already on a different reporting track) or to gains fully covered by PRR (no taxable gain to report). For jointly-owned property, each owner files their own return.

Can my spouse and I split the gain to use both AEAs?

Yes if the property is in joint names (joint tenants or tenants in common). Each spouse gets their own £3,000 AEA and their own basic-rate band headroom. Transferring a property into joint names BEFORE sale is the "Bed and Spouse" CGT planning technique. Inter-spouse transfers are at no-gain-no-loss under Section 58 TCGA 1992 (Section 18 IHTA spousal exemption parallel). The transfer must happen while both spouses are alive AND living together AND legally married / in civil partnership. Practical mechanics: get title transferred via Land Registry TR1 form (£40-60 fee + solicitor £150-300) at least 1 day before completion. Tenants-in-common allows uneven shares (90:10, 99:1) where one spouse has more basic-rate headroom. Cannot retroactively split after exchange of contracts on sale.

Can I deduct improvements and costs from the gain?

Yes - "enhancement expenditure" reflected in the value at disposal is deductible (Section 38 TCGA 1992). Includes: capital improvements (extensions, loft conversions, new kitchen of substantially better quality, but NOT like-for-like replacements which are revenue), legal fees on purchase and sale, Stamp Duty Land Tax paid on acquisition, estate agent commission on sale, surveyor / valuer fees. NOT deductible: routine maintenance, repairs, redecoration, mortgage interest (those are revenue items for rental income tax), Council Tax, insurance, utility bills. The deduction is from the gross gain (sale - purchase), reducing the taxable amount. Keep all receipts for at least 6 years after disposal in case of HMRC enquiry. For pre-1982 owned property use the 31 March 1982 market value instead of original purchase price (rebasing).

What about non-resident landlords?

Non-UK-resident sellers of UK residential property have been liable to UK CGT since 6 April 2015 (Finance Act 2015) — extended to non-residential UK property and indirect disposals (e.g. selling shares in a company that owns UK property) from 6 April 2019. Non-residents must report within 60 days of completion via the same UK Property Disposal service, regardless of whether tax is due. CGT applies only to the gain accruing since 6 April 2015 - so for property bought before 2015 you rebase to 5 April 2015 market value (the default; alternative methods of straight-line apportionment available). Non-residents do NOT get the AEA in most cases (unless qualifying for it through other means). Rate is still 18% / 24% for residential, but with the band starting at the basic-rate threshold (UK source income may have used some basic-rate band already). Double-taxation treaties may give credit for any UK CGT paid against home-country tax.

What if the property is held in a Limited Company?

Property in a Limited Company pays Corporation Tax on the chargeable gain, NOT CGT. Rate is 19% (small profits, up to £50k taxable) or 25% (main rate, above £250k) with marginal relief between. Indexation Allowance (which reduces the gain by inflation) was frozen at December 2017 for corporate gains - so for property bought after December 2017 there's no indexation; for older property indexation runs from acquisition to December 2017 only. Substantial Shareholding Exemption does NOT apply to property companies. When extracting the proceeds from the company to the shareholder, additional 8.75% / 33.75% / 39.35% dividend tax applies or 10% / 20% CGT under BADR / MVL if winding up. Combined effective tax on extracting a £100k gain from a company-owned BTL can hit 40-50% - which is why direct personal ownership often wins despite higher headline CGT rates. The "incorporate to save tax" advice for landlords with 5+ properties is a much more nuanced calculation than headlines suggest.

Can I roll the gain over into another property?

Generally NO for residential investment property. Rollover relief (Section 152 TCGA 1992) only applies to qualifying business assets - not residential lettings, not buy-to-let, not holiday homes. Furnished Holiday Lettings DID qualify for rollover relief until April 2025 when the FHL regime was abolished — so this exit route is now closed. Limited rollover scenarios that DO apply to property: (1) commercial property used in your own trade can rollover into other qualifying business assets, (2) farm land used in a farming trade qualifies. (3) Compulsory purchase order compensation can roll over into a replacement property under Section 247 TCGA. For ordinary residential investment, the only "rollover-like" planning is timing disposals across tax years to use multiple AEAs and basic-rate bands, or holding until the property forms part of an inherited estate (where it gets a CGT-free uplift to date-of-death value under Section 62 TCGA, although IHT may apply separately).

What happens to CGT if I die holding the property?

Death triggers a CGT "uplift" (Section 62 TCGA 1992) - the property's base cost for the beneficiaries becomes its market value at date of death, with no CGT payable on the gain accrued during the deceased's lifetime. So if you bought at £150,000, the value at your death is £400,000, your heirs inherit it at £400,000 base cost and only pay CGT on subsequent gains. IHT applies separately to the date-of-death value (40% above NRB + RNRB - see our IHT couple calculator). For high-gain properties with no PRR available, holding until death (and accepting the IHT hit) can be more tax-efficient than selling and paying CGT in your lifetime - particularly if you have NRB/RNRB headroom unused. This is one of the few cases where "doing nothing" is the optimal tax strategy. From April 2027 pensions enter the IHT estate so this play gets more interesting.

What records do I need to keep for a CGT on property sale?

Keep all of these for at least 6 years after the sale (HMRC discovery window): (1) Purchase paperwork - completion statement showing purchase price, conveyancing solicitor invoice, Stamp Duty Land Tax certificate / SDLT5 form, mortgage application showing purchase price. (2) Sale paperwork - completion statement, estate agent invoice, conveyancing solicitor invoice. (3) Capital improvement receipts - builder invoices, planning permission, surveyor reports for extensions / loft conversions / new kitchens of substantially better quality. (4) Periods of occupation if claiming PRR - utility bills, Council Tax bills, electoral roll entries showing the property as your main residence. (5) Joint-ownership documentation - Land Registry title, declaration of trust if uneven shares. HMRC opens roughly 1 in 60 CGT returns to enquiry - good records make enquiries painless; missing records make them expensive. For complex or large gains, consider getting a Form 17 lodged with HMRC to confirm the joint-ownership shares.

Capital Gains Tax calculator - general interactive CGT calc for any disposal.
CGT on shares calculator - Section 104 pool, 30-day rule, Bed and ISA.
UK CGT rules guide - rates, BADR schedule, residential property.
Landlord tax guide - Section 24, allowable expenses, residential CGT.
Stamp Duty calculator - SDLT on the purchase side including 5% second-home surcharge.
UK Stamp Duty rules - SDLT bands, first-time buyer relief, 5% surcharge.
IHT couple calculator - the inheritance route as alternative to lifetime sale.
Section 24 calculator - mortgage interest restriction for landlords.