p>Selling a buy-to-let is often the biggest tax event a landlord faces. Capital Gains Tax (CGT) is charged on the profit, and the deadline is far shorter than most people expect: you must report the sale and pay the tax within 60 days of completion. Miss it and penalties and interest start straight away, even if you were planning to put it on your normal tax return.
How much CGT will you pay?
For 2026/27, gains on residential property are taxed at:
- 18% on any part of the gain that falls within your unused basic-rate band
- 24% on the rest
Each individual also has a CGT annual exempt amount of £3,000. Joint owners each get their own.
How to calculate the gain
Start with the sale price, then deduct:
- The original purchase price
- Buying costs: stamp duty, solicitor’s fees and survey fees
- Improvement costs — extensions, loft conversions, new kitchens that upgraded the property (not repairs already claimed against rent)
- Selling costs: estate agent and solicitor’s fees
Worked example
Priya bought a flat in 2014 for £180,000, paying £6,000 in buying costs. She spent £15,000 on an extension and sells for £290,000 in 2026, with £5,000 of selling costs.
- Gain: £290,000 − £180,000 − £6,000 − £15,000 − £5,000 = £84,000
- Less annual exempt amount: £3,000 → £81,000 taxable
- She’s a higher-rate taxpayer, so all of it is taxed at 24% = £19,440
The 60-day rule
If you’re a UK resident and sell UK residential property with CGT to pay, you must:
- Create a Capital Gains Tax on UK property account on GOV.UK
- Submit the return within 60 days of completion
- Pay the estimated tax by the same deadline
Because your income for the year may not be final yet, you estimate which rate applies. You then include the sale on your Self Assessment return, where any difference is corrected.
The deadline runs from completion, not exchange. If there’s no tax to pay — for example, the gain is covered by your exempt amount or losses — you don’t need to file a 60-day return.
Penalties for missing the deadline
A late 60-day return attracts a £100 penalty, rising after 6 and 12 months. Late payment interest also runs from day 61. HMRC receives sale data from the Land Registry, so missing sales are easy for it to spot.
Reliefs that can reduce the bill
- Private residence relief — if you lived in the property as your main home at any point, that period is exempt, plus the final 9 months of ownership.
- Lettings relief — now only available if you shared occupancy with your tenant.
- Spouse transfers — transferring a share to a spouse or civil partner before sale is tax-neutral, and can use both exempt amounts and basic-rate bands. It must be a genuine, outright transfer.
- Capital losses — losses on other assets can be set against the gain.
Get the numbers right before you sell
SmartFiling’s ICAEW chartered accountants calculate the gain, file the 60-day return and include the sale on your Self Assessment return for a fixed fee. See our Landlord Accountant service or get a free quote.
Frequently asked questions
Do I still put the sale on my tax return?
Yes. The 60-day return is a payment on account. You report the final figures on your Self Assessment return.
Can I deduct mortgage interest from the gain?
No. Mortgage interest is never a deductible cost for Capital Gains Tax.
What if I’m not UK resident?
Non-residents must file a 60-day return for any sale of UK property, even if there’s no tax to pay.
