How Much Capital Gains Tax On Property Calculator

Estimate your potential capital gains tax when selling a property in the UK

Complete Guide to Capital Gains Tax on Property (2024)

When you sell a property that’s not your main home, you may need to pay Capital Gains Tax (CGT) on the profit you make. This comprehensive guide explains everything you need to know about calculating and paying capital gains tax on property in the UK, including recent changes to rates and allowances.

What is Capital Gains Tax on Property?

Capital Gains Tax is a tax on the profit you make when you sell (or ‘dispose of’) an asset that’s increased in value. For property, this typically applies to:

• Buy-to-let properties
• Second homes or holiday homes
• Inherited properties
• Business premises
• Land

You don’t usually pay CGT when selling your main home (your ‘private residence’) thanks to Private Residence Relief, though there are exceptions if you’ve let out part of it or used it for business.

How to Calculate Capital Gains Tax on Property

The basic calculation for capital gains tax on property involves:

1. Work out your gain: Sale price minus purchase price, minus allowable costs
2. Deduct your tax-free allowance: £6,000 for 2023/24 (reducing to £3,000 from April 2024)
3. Apply any reliefs: Such as Private Residence Relief or Letting Relief
4. Calculate the tax: Apply the appropriate rate (18% or 28% for residential property)

Step	Calculation	Example
1. Sale proceeds	Amount you sold the property for	£500,000
2. Minus purchase price	Original purchase price	£300,000
3. Minus improvement costs	Costs that enhanced value (not repairs)	£50,000
4. Minus selling costs	Estate agent fees, legal fees	£10,000
5. Equals total gain	Initial gain before reliefs	£140,000
6. Minus annual exemption	Tax-free allowance	£6,000
7. Minus reliefs	Private Residence Relief, Letting Relief	£70,000
8. Equals taxable gain	Amount subject to CGT	£64,000

Capital Gains Tax Rates for Property (2023/24)

The rate of Capital Gains Tax you pay on property depends on your income tax band:

• Basic rate taxpayers: 18% on residential property gains (28% if the gain pushes you into higher rate)
• Higher and additional rate taxpayers: 28% on residential property gains

For example, if you’re a higher rate taxpayer with a £64,000 taxable gain, you would pay:

£64,000 × 28% = £17,920 in Capital Gains Tax

Tax Year	Basic Rate (18%)	Higher Rate (28%)	Annual Exempt Amount
2023/24	18%	28%	£6,000
2024/25	18%	28%	£3,000
2022/23	18%	28%	£12,300
2021/22	18%	28%	£12,300

Key Reliefs That Reduce Your Capital Gains Tax Bill

1. Private Residence Relief

If the property has been your main home at any time, you may qualify for Private Residence Relief (PRR). This can reduce or eliminate your CGT bill. The relief covers:

• The time you lived in the property as your main home
• The final 9 months of ownership (even if you didn’t live there)

For example, if you lived in the property for 5 out of 10 years of ownership, you would get 50% + 9 months relief, totaling ~58% relief.

2. Letting Relief

If you’ve let out a property that was once your main home, you may qualify for Letting Relief. This is the lower of:

• £40,000
• The amount of Private Residence Relief you’re entitled to
• The chargeable gain you made while letting the property

Note: Letting Relief has been restricted since April 2020 and now only applies in limited circumstances where you share occupancy with the tenant.

3. Annual Exempt Amount

Everyone has an annual tax-free allowance for capital gains:

• £6,000 for individuals in 2023/24
• £3,000 from April 2024
• £12,300 for trusts

When You Don’t Pay Capital Gains Tax on Property

You don’t need to pay CGT in these situations:

• Selling your main home (with full Private Residence Relief)
• Gifts to your spouse or civil partner
• Transfers into a trust for a vulnerable beneficiary
• Gains within your annual exempt amount
• Properties sold at a loss (though you can use losses to reduce other gains)

How to Report and Pay Capital Gains Tax on Property

Since April 2020, you must report and pay any CGT due on UK residential property within 60 days of completion. This is a significant change from the previous system where you could wait until your Self Assessment tax return.

Step-by-Step Process:

1. Calculate your gain: Use our calculator above or work it out manually
2. Report the gain: Use HMRC’s online service or your Self Assessment tax return if you already file one
3. Pay the tax: You’ll receive a payment reference when you report
4. Keep records: Maintain documents for at least 5 years after the 31 January deadline

If you’re not registered for Self Assessment, you’ll need to create a Government Gateway account to report and pay.

Recent Changes to Capital Gains Tax on Property

The UK government has made several important changes to CGT in recent years:

1. Reduction in Annual Exempt Amount

• 2022/23: £12,300
• 2023/24: £6,000
• 2024/25: £3,000

2. 60-Day Reporting and Payment Window

Introduced in April 2020, this requires property disposals to be reported and paid within 60 days of completion (previously you had until the next Self Assessment deadline).

3. Changes to Letting Relief

From April 2020, Letting Relief only applies where the owner shares occupancy with the tenant, significantly reducing its availability.

4. Final Period Exemption Reduction

The final period exemption (where the last months of ownership are always treated as occupied) was reduced from 18 months to 9 months in April 2020.

Capital Gains Tax on Inherited Property

When you inherit a property, you don’t pay CGT immediately. However, you may need to pay:

• Inheritance Tax: If the estate is worth more than £325,000 (£500,000 if a home is left to children/grandchildren)
• Capital Gains Tax: When you eventually sell the property, based on the increase in value from the date of inheritance to the date of sale

The ‘acquisition cost’ for CGT purposes is usually the market value at the date of death (not what the original owner paid).

Capital Gains Tax for Non-UK Residents

If you’re non-UK resident and sell UK property, you:

• Must report the sale to HMRC within 60 days (30 days for disposals before 27 October 2021)
• Pay CGT at the same rates as UK residents (18% or 28%)
• Don’t get the annual tax-free allowance unless you’re a ‘temporary non-resident’
• May be eligible for Private Residence Relief if the property was your main home

Non-residents must use HMRC’s non-resident CGT service to report and pay.

How to Reduce Your Capital Gains Tax Bill

There are several legitimate ways to reduce your CGT liability:

1. Use Your Annual Exempt Amount

If you have other assets to sell, consider spreading gains across tax years to make full use of your annual allowance.

2. Transfer Assets to Your Spouse

Transfers between spouses are CGT-free. If one of you pays a lower tax rate, transferring the asset before sale could reduce your combined tax bill.

3. Time Your Sale Carefully

If your income varies year to year, selling in a year when you’re a basic rate taxpayer could reduce your CGT rate from 28% to 18%.

4. Claim All Available Reliefs

Make sure you claim Private Residence Relief, Letting Relief (if eligible), and any other reliefs you qualify for.

5. Offset Losses

Capital losses can be offset against gains in the same tax year or carried forward to future years.

6. Consider a Bed and Spouse Strategy

Selling an asset to your spouse at market value can crystallise a gain using their annual allowance, then they can sell it later using their allowance.

Common Mistakes to Avoid

• Forgetting to include all costs: Many people miss improvement costs or selling fees that can reduce their gain
• Incorrectly calculating reliefs: Private Residence Relief calculations can be complex, especially with periods of absence
• Missing the 60-day deadline: Late reporting can lead to penalties
• Not keeping proper records: Without receipts for improvements, HMRC may disallow your claims
• Assuming all property sales are tax-free: Many people are caught out by the rules on second homes and inherited properties

Capital Gains Tax vs Stamp Duty

It’s important to distinguish between Capital Gains Tax and Stamp Duty Land Tax (SDLT):

Aspect	Capital Gains Tax	Stamp Duty Land Tax
When it applies	When you sell/dispose of an asset	When you buy a property
What it’s based on	The profit (gain) you make	The purchase price of the property
Who pays	The seller	The buyer
Rates for property	18% or 28%	Up to 12% (15% for additional properties)
Payment deadline	60 days after completion	14 days after completion

Frequently Asked Questions

Do I pay Capital Gains Tax when selling my main home?

Usually not, thanks to Private Residence Relief. However, you may need to pay CGT if:

• You’ve let out part of your home
• You’ve used part of your home exclusively for business
• Your home is very large (over 5,000 sq m including gardens)
• You didn’t live in the property for the entire period of ownership

How do I calculate the gain if I inherited the property?

The gain is calculated based on the increase in value from the date of inheritance to the date of sale. The acquisition cost is usually the market value at the date of death (not what the original owner paid).

What counts as an ‘improvement’ for CGT purposes?

Improvements that can be deducted from your gain include:

• Extensions or conversions
• Installing a new kitchen or bathroom
• Double glazing
• Central heating systems
• Loft conversions

General maintenance and repairs (like fixing a leak or repainting) don’t count as improvements.

Can I avoid Capital Gains Tax by gifting property?

Gifting property to family members doesn’t avoid CGT – it’s treated as a disposal at market value. The recipient may also face Inheritance Tax issues. There are some exceptions for gifts to spouses/civil partners.

What happens if I sell at a loss?

If you sell for less than you paid (including costs), you’ve made a capital loss. You can’t claim tax relief on this, but you can use the loss to reduce gains on other assets in the same or future tax years.

Important Disclaimer: This calculator and guide provide general information only. Capital Gains Tax rules are complex and depend on your individual circumstances. For accurate advice tailored to your situation, please consult a qualified tax advisor or accountant. The rates and allowances mentioned are for the 2023/24 tax year and may change. HMRC’s rules can be found on their official website.

Additional Resources

• GOV.UK: Capital Gains Tax Overview
• GOV.UK: Tax When You Sell a Property
• Which?: Capital Gains Tax on Property Guide
• Citizens Advice: Capital Gains Tax Help