CGT on Second Home 2026/27: Buy-to-Let and Holiday Home Capital Gains
CGT on a second home or buy-to-let 2026/27: 18% and 24% rates, the £3,000 exempt amount, PRR, the 60-day return and 4 worked examples.
Key 2026/27 CGT rates and allowances
Gains in the basic-rate band
18%
On the part of the gain within your unused £37,700 basic-rate band (£50,270 of income with the standard Personal Allowance)
Gains above it
24%
The residential higher rate was 28% before 6 April 2024
Annual exempt amount
£3,000
Per person per tax year (TCGA 1992 s.1K(2)); £12,300 in 2022/23
4 worked CGT scenarios
Each owner's gain is added on top of their own income for the year. Income figures are before the Personal Allowance and assume the standard allowance.
| Scenario | Purchase / sale | Gross gain | PRR | Chargeable gain | CGT | Effective rate |
|---|---|---|---|---|---|---|
| Buy-to-let flat, sole owner earning £30,000 Never lived in, so no PRR. Per owner after the exempt amount: £20,270 at 18% and £39,730 at 24%. |
Buy £200,000 Sell £280,000 Costs £17,000 | £63,000 | £0 | £63,000 | £13,184 | 20.9% |
| Holiday home, joint owners each earning £60,000 Never lived in, so no PRR. Gain split £60,000 each; each owner has their own £3,000 exempt amount. Per owner after the exempt amount: £0 at 18% and £57,000 at 24%. |
Buy £350,000 Sell £500,000 Costs £30,000 | £120,000 | £0 | £120,000 | £27,360 | 22.8% |
| Former main home, then let, owner earning £60,000 Main home for 6 of 12 years, plus the final 9 months: PRR covers 56.25%. Per owner after the exempt amount: £0 at 18% and £132,625 at 24%. |
Buy £250,000 Sell £600,000 Costs £40,000 | £310,000 | £174,375 | £135,625 | £31,830 | 10.3% |
| Large buy-to-let gain, sole owner earning £80,000 Never lived in, so no PRR. Per owner after the exempt amount: £0 at 18% and £537,000 at 24%. |
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 minus purchase price, minus the costs of buying and selling (legal and agent fees, surveyor, SDLT) and capital improvements still reflected in the property (TCGA 1992 s.38). Repairs and redecoration are not deductible.
- Private Residence Relief = gross gain × (time as your only or main home + final 9 months) / total ownership, if it was ever your main home.
- Chargeable gain = gross gain minus PRR.
- Per-owner split: each owner is taxed on their own share of the gain, which follows the beneficial ownership.
- Exempt amount: each owner deducts their own £3,000.
- Rates: the gain is stacked on top of the owner's taxable income. 18% on the part that fits within the unused £37,700 basic-rate band, 24% above it. Someone whose income already exceeds the basic-rate band pays 24% on all of it.
- Report and pay within 60 days of completion through a Capital Gains Tax on UK property account if tax is due.
Private Residence Relief, the key relief
For a property that was your main home at some point, PRR exempts part of the gain:
PRR amount = Gross gain × (months as main home + 9) / total months owned
The last 9 months of ownership count automatically if the property was ever your only or main residence (TCGA 1992 s.223). It was 18 months until Finance Act 2020 s.24 cut it to 9 for disposals from 6 April 2020. It is 36 months if you or your spouse or civil partner is disabled or a long-term resident in a care home and the other conditions in s.225E are met.
Worked example: owned for 12 years, lived in it for the first 6, then let it. PRR fraction = (72 + 9) / 144 months = 56.25%. Of a £350,000 gain, £196,875 is exempt and £153,125 is chargeable, before the exempt amount and rates.
60-day reporting requirement
If you sell UK residential property and CGT is due, you must report the sale and pay the tax within 60 days of completion through a Capital Gains Tax on UK property account. The 60-day limit applies to completions from 27 October 2021; it was 30 days for completions from 6 April 2020 to 26 October 2021. If you are registered for Self Assessment you also include the sale on your tax return.
The deadline runs from completion, but the return also asks for the date you exchanged contracts, which is the date of disposal for tax purposes. Each owner reports their own gain. UK residents whose total gains are below the exempt amount do not need to report online; non-residents must report every UK property disposal, even with no tax to pay. Reporting or paying late can mean interest and a penalty.
Joint ownership: two exempt amounts and two basic-rate bands
Joint ownership splits the gain between the owners, and each has their own £3,000 exempt amount and basic-rate band. Example: a £100,000 gain, both owners earning £60,000. Sole owner: £97,000 taxable, CGT £23,280. Joint owners: £47,000 taxable each, CGT £11,280 each, £22,560 in total. The saving is £720: the second exempt amount at 24%.
The saving is larger where one spouse has unused basic-rate band, because their share is taxed at 18% up to the top of that band. A transfer between spouses or civil partners who are living together is at no gain, no loss (TCGA 1992 s.58), and it must be done before contracts for the sale are exchanged (s.28). Form 17 relates to rental income for Income Tax, not to CGT.
Related CGT tools and guides
- 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 the higher rates for additional dwellings.
- UK Stamp Duty rules - SDLT bands, first-time buyer relief, higher rates for additional dwellings.
- IHT couple calculator - the inheritance route as alternative to lifetime sale.
- Section 24 calculator - mortgage interest restriction for landlords.
Frequently asked questions
What rate of CGT do I pay on a second home in 2026/27?
18% on the part of the gain that fits in your unused basic-rate band and 24% on the rest (TCGA 1992 s.1H). The gain is added on top of your taxable income: with the standard Personal Allowance the basic-rate band runs to £50,270 of income. Example: salary £45,000, gain £80,000, less the £3,000 exempt amount leaves £77,000. £5,270 is taxed at 18% and £71,730 at 24%, so the CGT is £18,164. The higher rate for residential property was 28% until it was cut to 24% for disposals from 6 April 2024 (Finance (No. 2) Act 2024 s.6).
What is the £3,000 annual exempt amount?
The annual exempt amount is the amount of gains you can make in a tax year before CGT is due. It is £3,000 (TCGA 1992 s.1K(2)) and covers all your gains for the year together, not each asset. It was £12,300 until 2022/23, £6,000 in 2023/24 and has been £3,000 since 2024/25 (Finance Act 2023 s.8). Each person has their own, so joint owners have one each. You can set it against the gains that would be taxed at the highest rate.
What is Private Residence Relief (PRR) and when does it apply?
PRR exempts the part of the gain for the time the property was your only or main residence (TCGA 1992 ss.222-223). If it was your main home at any point, the last 9 months of ownership also count. The exempt fraction is (time as main home + final 9 months) / total ownership. Example: owned for 12 years, main home for the first 6, then let. Exempt fraction 56.25%: of a £350,000 gain, £196,875 is exempt and £153,125 is chargeable. A property you never lived in gets no PRR.
What happened to Lettings Relief?
For disposals from 6 April 2020, Lettings Relief only applies where you lived in part of the property as your only or main residence while letting another part of it (TCGA 1992 s.223B, inserted by Finance Act 2020 s.24). The relief is capped at the lower of the PRR you get and £40,000. Letting out a former home after you moved out no longer qualifies. The same Act cut the final period exemption from 18 months to 9.
I need to report the disposal within 60 days - what is the UK property account?
If you sell UK residential property and CGT is due, you must report it and pay the tax within 60 days of completion, using a Capital Gains Tax on UK property account. That deadline applies to completions from 27 October 2021; it was 30 days for completions from 6 April 2020 to 26 October 2021. UK residents do not need to report online if their total gains are below the exempt amount. If you are in Self Assessment you also include the sale on your tax return. Each owner reports their own gain. Late reporting or payment can mean interest and a penalty.
Can my spouse and I split the gain to use both exempt amounts?
Yes, if you both own the property. Each of you has your own £3,000 exempt amount and your own unused basic-rate band. A transfer between spouses or civil partners who are living together is treated as no gain, no loss (TCGA 1992 s.58). To count for the sale, the transfer must happen before contracts are exchanged, because the date of disposal under an unconditional contract is the date of exchange, not completion (TCGA 1992 s.28). Form 17 is a different thing: it declares unequal shares of rental income for Income Tax.
Can I deduct improvements and costs from the gain?
Yes. TCGA 1992 s.38 allows the purchase price and its incidental costs, spending that enhanced the property and is still reflected in it at sale, and the costs of selling. Incidental costs include fees for surveyors, valuers, estate agents and solicitors, and Stamp Duty Land Tax. Repairs, maintenance and mortgage interest are not deductible from the gain (s.38(3) excludes interest).
What about non-resident landlords?
If you are not UK resident, you must report every disposal of UK property or land within 60 days, even if no tax is due or you made a loss. Individuals, including non-residents, get the annual exempt amount. For residential property owned at 5 April 2015 the standard approach is to work out the gain from its market value on that date; time apportionment over the whole ownership is an alternative. Your CGT rate is worked out from your taxable UK income.
What if the property is held in a limited company?
A company pays Corporation Tax, not CGT, on its gains: 19% on profits up to £50,000 and 25% above £250,000, with marginal relief in between (2026/27). Taking the money out as a dividend is taxed again at 10.75%, 35.75% or 39.35% above the £500 dividend allowance. Whether company ownership comes out ahead depends on the figures in each case.
Can I roll the gain over into another property?
Generally no. Roll-over relief (TCGA 1992 s.152) is for assets used in a trade, and letting residential property is an investment rather than a trade. For most landlords the planning options are timing the sale (each tax year brings a new exempt amount and basic-rate band), joint ownership with a spouse, and keeping records of every allowable cost.
What happens to CGT if I die holding the property?
On death the property is treated as acquired by your personal representatives at its market value on the date of death, and there is no CGT disposal by you (TCGA 1992 s.62). Your heirs only pay CGT on any rise in value after that. Inheritance Tax is separate: it is charged at 40% on the estate above the £325,000 nil-rate band and any other allowances. Holding until death avoids the CGT but not the IHT.
What records do I need to keep for a CGT on property sale?
Keep the purchase and sale completion statements, solicitor and estate agent invoices, the SDLT return, invoices for improvements, and evidence of any period you lived there if you claim PRR (for example Council Tax bills). For joint ownership, keep the title and any declaration of trust showing the shares. The UK property return asks for the exchange and completion dates and any reliefs you claim.