Capital gains tax on UK property is one of the most commonly misunderstood taxes. Many sellers are caught off guard by the amount owed or the tight reporting deadline. Understanding the rules before you sell can save thousands.\n\nWhen CGT Applies — You pay CGT on the profit when you sell a property that is not your main residence. This includes buy-to-let properties, second homes, inherited properties you have not lived in, and your main home if it does not qualify for full Private Residence Relief. There is no CGT on selling your main home if you have lived in it as your only or main residence throughout your ownership.\n\nCurrent Rates — For residential property, CGT is 18% for basic-rate taxpayers and 24% for higher and additional-rate taxpayers. The annual CGT allowance is 3,000 per person (reduced from 12,300 in April 2023). This means the first 3,000 of gain each tax year is tax-free.\n\nCalculating the Gain — Sale price minus purchase price minus allowable costs. Allowable costs include stamp duty paid on purchase, legal fees on both purchase and sale, estate agent fees, cost of improvements (but not maintenance or repairs), and valuation fees for CGT purposes. If you inherited the property, the base cost is the probate value at the date of death.\n\nPrivate Residence Relief — If you lived in the property as your main home for part of your ownership, you receive PRR for those periods plus the final 9 months of ownership regardless of whether you lived there. The gain is apportioned on a time basis. Example: you owned for 10 years, lived in it for 6 years, then let it for 4 years. PRR covers 6 years plus 9 months equals 6.75 out of 10 years, so 67.5% of the gain is tax-free.\n\nLettings Relief — Previously generous, lettings relief was restricted from April 2020. It now only applies if you share occupation with the tenant (lodger arrangements), making it irrelevant for most landlords.\n\nThe 60-Day Reporting Deadline — Since April 2020, UK residents must report and pay CGT on UK residential property within 60 days of completion using the HMRC Capital Gains Tax on UK Property service. This is separate from your self-assessment tax return. Late reporting triggers automatic penalties: 100 initial fixed penalty, plus daily penalties if more than 3 months late, plus interest on unpaid tax.\n\nReducing Your CGT Bill — Transfer property to a spouse before sale to use both annual allowances and potentially access a lower tax rate. Offset capital losses from other disposals. Time your sale to fall in a tax year where your other income is lower. Ensure all allowable costs are claimed. Consider holdover relief or gift relief where applicable.\n\nNon-Residents — Since April 2015, non-UK residents pay CGT on UK property disposals. The same 60-day reporting and payment deadline applies. The gain can be calculated from April 2015 (not the original purchase date) using a rebasing election.