How the gain is worked out
You pay Capital Gains TaxCapital Gains Tax: Tax on the profit when you sell or dispose of an asset that has risen in value. On shares it is 18% or 24% in 2026/27, charged only on gains above the annual exempt amount. on the gain, not the full sale price. Deduct your allowable costs - the Stamp Duty you paid, solicitors' and estate-agent fees, and money spent improving the property (an extension), but not repairs or maintenance such as painting or a new boiler. That line is HMRC's, set out in manual CG15150.
The first £3,000 of total gains in the year is tax-free (the annual exempt amountThe Capital Gains Tax allowance: the slice of gains you can realise each tax year before any CGT is due. It is £3,000 for 2026/27 and cannot be carried forward if unused.). Residential property is taxed at higher rates than other assets: 18% on gain that falls in your unused basic-rate band (income under £50,270) and 24% above it.
Your main home: Private Residence Relief
If a property was your only or main home for the whole time you owned it, Private Residence ReliefPrivate Residence Relief: The relief that exempts the gain on your only or main home from Capital Gains Tax - for the period you lived there plus the final 9 months of ownership, apportioned over the total time you owned it. exempts the entire gain. The complexity - and the gap most calculators skip - is what happens when it was your home for only part of the time.
The exempt slice is the period you lived there plus the final 9 months of ownership (the final period counts even after you have moved out), over the total months owned:
exempt fraction = (months as your main home + 9) ÷ total months owned
Owned a flat for 10 years, lived in it the first 6, then let it for 4? The 6 years plus the final 9 months - 81 of 120 months - are exempt, so only about a third of the gain is taxable before your allowance.
Lettings relief: the rule that changed
Plenty of former landlords still expect up to £40,000 of lettings reliefA Capital Gains Tax relief on a former main home that was let. Since April 2020 it applies only where you shared occupancy with the tenant (e.g. a lodger), capped at £40,000.. Since 6 April 2020 it is far narrower: it applies only where you shared occupancy with your tenant - a lodger in the home you were living in. If you moved out and let the whole property, you almost certainly no longer qualify (HMRC CG64710).
Inherited or gifted property
Your base cost is the market value when you acquired it, not what the previous owner paid. For an inherited property that is the probate value at the date of death, so your taxable gain is only the growth since then - which often turns a frightening-looking sale price into a modest bill.
Reporting and paying
If CGT is due on a UK residential property you must report and pay it within 60 days of completion, through HMRC's "Capital Gains Tax on UK property" account - separate from normal Self Assessment, and easy to miss. Non-residents must report every UK property disposal within 60 days, even when no tax is due. The full walkthrough is in our 60-day CGT reporting guide. For gains on shares and funds, see the CGT on shares guide and the shares CGT calculator.