CGT on UK property disposal in 2026

A landlord disposal of UK residential property is one of the most time-pressured events in a Self Assessment year. The chargeable gain has to be computed, reported and paid within 60 days of completion under Schedule 2 FA 2019, well before the year-end return is anywhere near being prepared. This guide sets out the reporting machinery, the current rates following F(No.2)A 2023, the PPR rules in TCGA 1992 s.222–s.223, and the post-2020 restricted lettings relief — with a worked example for a former-PPR rental sale.

The 60-day report-and-pay window

Schedule 2 FA 2019 introduced a standalone reporting regime for UK residential property disposals by individuals, trustees and personal representatives. From 27 October 2021, the deadline was extended from 30 days to 60 days from the date of completion (not exchange). Two things are due in that window:

• A UK Property Disposal return filed through the dedicated HMRC online service (not Self Assessment).
• A payment of the CGT estimated on that return, using best available figures for income and other gains in the year.

The return is required whenever there is CGT to pay. No return is due if the disposal is fully covered by Principal Private Residence relief, falls within the annual exempt amount after taking all other gains into account, or sits below the proceeds reporting threshold and produces no liability. In practice, almost every landlord disposal of a let property triggers a return.

Late filing penalties mirror the Self Assessment regime: £100 immediate, daily penalties from three months, and tax-geared penalties at six and twelve months. Interest runs on late payment from day 61. The annual return must still be filed — the year-end Self Assessment picks up the same gain, with the 60-day payment credited as tax already paid.

Non-residents

Non-resident individuals report all direct and indirect disposals of UK land within 60 days under the same Schedule 2 regime, whether or not there is tax to pay. The scope is wider than for residents — commercial property and shares in property-rich companies are caught — and a return is due even on a no-gain-no-loss outcome.

Current CGT rates on residential property

F(No.2)A 2023 cut the higher residential rate from 28% to 24% with effect from 6 April 2024. The basic rate band rate of 18% is unchanged. The applicable rate depends on where the gain sits when stacked on top of the taxpayer’s taxable income for the year:

• Gain falling within unused basic rate band — 18%.
• Gain above the basic rate band — 24%.
• Trustees and personal representatives — 24% flat.

The annual exempt amount is £3,000 for 2025/26 (reduced from £6,000 for 2023/24 and £12,300 before that). For higher-earning landlords, the AEA is now a rounding error against a typical disposal gain.

Non-residential property and most other chargeable assets still use the 10%/20% rates, with carried interest sitting at 18%/24%. Mixed-use property (a flat above a shop, for example) is apportioned between residential and non-residential treatment on a just and reasonable basis under CG73605.

Computing the gain — TCGA 1992 framework

The basic computation is set out in TCGA 1992 ss.1–28 and unpacked in HMRC Manual CG10200+. For a residential disposal:

• Disposal proceeds — typically the sale price. Connected-party disposals are substituted with market value under TCGA 1992 s.17.
• Less acquisition cost (or 31 March 1982 value for pre-rebasing assets).
• Less enhancement expenditure reflected in the state of the asset at disposal (s.38(1)(b)) — capital works, extensions, new bathrooms. Routine repairs already deducted against rental profits cannot be claimed again.
• Less incidental costs of acquisition and disposal — legal fees, SDLT on acquisition, estate agent and solicitor fees on sale.
• Less reliefs — primarily PPR and, in narrow cases, lettings relief.

Principal Private Residence relief

PPR relief under TCGA 1992 s.222–s.223 exempts the proportion of the gain attributable to periods of actual or deemed occupation as the taxpayer’s only or main residence. HMRC’s guidance on the mechanics is at CG64200+ and CG65000+.

The standard formula:

PPR relief = Gain × (qualifying period of occupation ÷ total period of ownership)

“Qualifying period” covers actual occupation as main residence, plus several statutory deemed-occupation periods.

The final 9 months

The final period of ownership is always treated as a period of occupation, provided the property has been the only or main residence at some point. From 6 April 2020 this final period is 9 months (reduced from 18 months by Schedule 1 FA 2020). It is 36 months for disposals by, or where the owner has, a disability or has moved into a care home, subject to the conditions in s.225E.

Other deemed-occupation periods

Under s.223(3), additional absences can qualify if the property was the main residence both before and after the absence, and the taxpayer had no other property qualifying for relief during the period:

• Any period of absence up to 3 years in total, for any reason;
• Any period of work outside the UK by the taxpayer or their spouse;
• Up to 4 years of work elsewhere in the UK that prevented occupation.

These reliefs are conditional on the property being reoccupied as main residence after the absence, unless the failure to reoccupy is itself caused by employment elsewhere — see CG65046.

Nomination and the “only or main” question

Where a taxpayer has more than one residence, they can nominate which is treated as main residence under s.222(5), within two years of acquiring the second residence. Without a nomination, it is a question of fact based on quality and pattern of occupation — CG64470 onwards. Married couples and civil partners can only have one main residence between them.

Lettings relief — now restricted

Lettings relief used to cover gains accruing during periods when a former main residence was let. From 6 April 2020, Schedule 1 FA 2020 amended TCGA 1992 s.223B so that lettings relief is only available where the owner is in shared occupation with the tenant. In practice this excludes nearly every buy-to-let scenario. For a landlord who moved out and let the property to an unrelated tenant, lettings relief is gone — even for the pre-April 2020 portion of the gain.

This is the single largest CGT change landlords selling former homes encounter, and it catches advisers who haven’t looked at lettings relief since the previous regime. The maximum relief was £40,000 per owner; for a joint-owner couple selling a former family home, the loss of relief is up to £80,000 of exempt gain.

Joint ownership, spouses and gifts

Spouses and civil partners living together are treated under TCGA 1992 s.58 as transferring at no gain, no loss. A pre-sale transfer into joint names can use both annual exempt amounts and both basic rate bands. The receiving spouse inherits the transferor’s base cost and acquisition date for PPR purposes — they don’t get a fresh start.

A gift to anyone else (an adult child, a sibling) is a disposal at market value under s.17. CGT is due even though no cash changes hands, and the donor needs liquidity to fund the tax. Holdover relief under s.165 is not available for residential property held outside business assets.

Joint ownership splits the gain by beneficial interest, not legal title. A Form 17 election under ITA 2007 s.837 only fixes income tax allocation for spouses; it does not change CGT shares, which follow underlying beneficial ownership.

Worked example — former PPR now let

Alex bought a flat in May 2014 for £180,000. They lived in it as their only residence for the first four years, then moved in with a partner and let the flat out from May 2018. The flat is sold in May 2026 for £350,000. Costs of acquisition were £4,000 (legal and SDLT) and costs of sale are £6,000.

Alex is a higher-rate taxpayer with no other gains in the year. The flat has not been their main residence since May 2018, and they have not been in shared occupation with the tenant.

Step 1 — gross gain.
Proceeds £350,000 less cost £180,000 less costs £10,000 = £160,000.

Step 2 — PPR-qualifying period.
Total ownership: May 2014 to May 2026 = 144 months.
Actual occupation: May 2014 to May 2018 = 48 months.
Final 9 months of ownership (s.223(2)): 9 months.
The final 9 months falls inside the let period and isn’t already counted in the 48 months, so it adds.
Qualifying period = 48 + 9 = 57 months.

Step 3 — PPR relief.
£160,000 × (57 ÷ 144) = £63,333.

Step 4 — lettings relief.
Alex was not in shared occupation with the tenant after April 2020, so lettings relief is unavailable under amended s.223B. £0.

Step 5 — chargeable gain after reliefs.
£160,000 − £63,333 = £96,667.
Less annual exempt amount £3,000 = £93,667.

Step 6 — tax.
Alex is already in the higher rate band on income, so the full gain falls in the 24% slot.
£93,667 × 24% = £22,480.

That £22,480 is due within 60 days of completion, alongside a UK Property Disposal return through HMRC’s online service. The same gain will reappear on Alex’s 2026/27 Self Assessment, with the £22,480 carried as tax already paid.

Practical points for firms

• Get the completion date as soon as exchange happens. The 60-day clock is short. Asking clients to forward the completion statement the day it lands prevents a scramble.
• Estimate, don’t guess. The return uses best available figures for income and reliefs. If the in-year estimate proves wrong, the year-end Self Assessment reconciles — but it is the only chance to amend without penalty.
• Document occupation evidence. Council tax bills, utility accounts, voter registration and GP records all support a PPR claim if HMRC opens an enquiry on the qualifying-period split.
• Check Section 24 interactions. Finance cost restriction doesn’t apply to CGT directly, but it changes total taxable income for the year — which changes where the gain slots between the 18% and 24% rates.
• Don’t forget reporting under MTD ITSA. CGT sits outside the quarterly cycle and outside the Final Declaration in the same form it always did — but the rental profits up to the disposal still feed the quarterly updates.