Reduce CGT on UK Property sale

 When selling property in the UK, it is important to understand how Capital Gains Tax (CGT) applies. CGT is charged on the profit made when disposing of an asset that has increased in value. For residential property, this includes not only your main home (if it does not qualify for full relief) but also second homes, buy-to-let investments, and properties owned by non-residents.

Capital Gains Tax is triggered when you sell, transfer, gift, or otherwise dispose of a property. The taxable gain is calculated as the difference between the sale proceeds (or market value, if gifted) and the property’s original purchase price, adjusted for allowable costs such as legal fees, estate agent fees, and certain improvement works. It is important to note that normal maintenance and repairs do not qualify as deductible costs.

CGT Rates on Residential Property

reduce CGT on UK property sale

The rate of tax you pay depends on your overall income level:

Basic-rate taxpayers pay 18% on property gains.

Higher and additional-rate taxpayers pay 28%.

If part of your gain falls within the basic rate band and the rest pushes you into higher rates, a combination of 18% and 28% will apply.

Allowances and Reliefs

Every individual benefits from the Annual Exempt Amount, which is a tax-free allowance against gains. For the 2025/26 tax year, this is £3,000. Married couples or civil partners can each use their allowance, effectively doubling the exemption if assets are jointly owned.

Private Residence Relief (PRR) may reduce or eliminate CGT when selling your main home, provided you have lived there as your primary residence. Even if you moved out, PRR can apply to the period of actual occupation plus the final nine months of ownership. In some cases, Lettings Relief may also be available if you rented out part of your main home.

Deadlines and Reporting

Since April 2020, UK residents must report and pay any CGT due on residential property sales within 60 days of completion. Non-residents must also report property disposals within this timeframe, regardless of whether CGT is due. Failure to meet deadlines can result in penalties and interest charges.

Non-Resident Rules

Non-UK residents are liable for CGT on disposals of UK property. Since 2015, this includes residential property, and since 2019, it extends to commercial property and certain indirect disposals. Gains are generally calculated from the April 2015 or April 2019 rebasing date, depending on the type of property.

Practical Steps to Minimise CGT

Make use of your Annual Exempt Amount and consider timing sales across tax years.

Transfer property into joint ownership with a spouse or civil partner to maximise reliefs.

Keep comprehensive records of purchase costs, improvement works, and sale expenses.

Consider reinvesting gains into tax-efficient structures where appropriate.

Seek advice before disposing of property to explore potential reliefs and avoid missed opportunities.

Why Expert Guidance Matters

UK property taxation is complex, with rules that vary for residents, non-residents, and different types of property ownership. Misunderstanding reliefs or missing reporting deadlines can lead to unnecessary liabilities and penalties. Specialist advice helps ensure compliance while minimising tax exposure.

Global Tax Consulting’s UK Capital Gains on Property resource provides in-depth guidance on CGT rules, exemptions, reporting requirements, and planning strategies. Whether you are selling a buy-to-let, a second home, or disposing of property as a non-resident, expert insights can help you navigate the process confidently and efficiently.

In summary: understanding how CGT applies to UK property sales is crucial for both residents and non-residents. With the right planning, reliefs, and timely reporting, you can reduce your tax burden while ensuring full compliance with HMRC requirements.