What you'll pay when you sell a buy-to-let, which costs bring the bill down, and the 60-day deadline that catches many landlords out.
Updated 10 October 2026
The short version
- You pay tax on the gain: the sale price, less what it cost to buy, improve and sell.
- The first £3,000 of gains each tax year is tax-free, per person.
- The rest is taxed at 18% where it fits in your unused basic rate band and 24% above that.
- You must report and pay within 60 days of completion, separately from your tax return.
How the gain is worked out
Start with the sale price and take off:
- Buying costs: the purchase price, stamp duty, and solicitor's and survey fees.
- Improvements: spending that added to the property and is still there when you sell, such as an extension, a loft conversion or a new kitchen where there wasn't one.
- Selling costs: estate agent's and solicitor's fees.
You can't deduct repairs and maintenance (they're claimed against rent instead), redecorating, or mortgage interest.
Worked example
A landlord earning £45,000 bought a flat for £185,000 including fees, spent £10,000 on improvements, and sells for £300,000 with £6,000 of selling costs.
| Sale price | £300,000 |
| Less selling costs | −£6,000 |
| Less purchase price and fees | −£185,000 |
| Less improvements | −£10,000 |
| Gain | £99,000 |
| Less annual allowance | −£3,000 |
| Taxable gain | £96,000 |
| Tax at 24% (salary and rent use up the basic rate band) | £23,040 |
If the flat were owned 50/50 with a spouse earning £20,000, with the £13,000 of rental profit also split between them, each would have half the gain and their own £3,000 allowance, and part of the spouse's share would be taxed at 18%. The bill drops to about £20,900. Try your own figures in the Sell or Keep calculator.
The 60-day deadline
You must report the sale and pay the tax within 60 days of completion, using HMRC's "Report and pay Capital Gains Tax on UK property" service. You'll need a Government Gateway account, so set it up before you complete. Miss the deadline and HMRC charges penalties and interest.
If you're in Self Assessment, you also include the sale on that year's tax return. The tax you've already paid is credited, so you don't pay twice. If your gains are covered by the £3,000 allowance, or you made a loss, you usually don't need a 60-day return.
If you once lived there
Private residence relief removes the part of the gain from the time it was your main home, plus the final 9 months of ownership. Lettings relief now only applies if you lived there at the same time as your tenant, not if you let the whole property.
Ways to pay less, within the rules
- Use both allowances. Transfers between spouses or civil partners who live together are free of capital gains tax, and joint owners each get £3,000 and their own basic rate band. Take advice first: a transfer can affect the mortgage, and stamp duty can be due if your spouse takes on part of it.
- Pick the tax year. For capital gains tax, the sale happens when you exchange contracts, not at completion. Exchanging on or after 6 April puts it in the new tax year, with a new allowance. Selling in a year when your other income is lower puts more of the gain in the 18% band.
- Pay into a pension. Personal pension contributions extend your basic rate band, which can move more of the gain into 18%.
- Use losses. Losses on other assets in the same year, or carried forward, reduce the gain. They must have been reported to HMRC.
- Keep every receipt. Without evidence of buying costs and improvements, you can't deduct them.
More ways to cut your tax bill: 12 Legal Ways to Pay Less Tax on Your Rental, each with one thing to do this week. £2.99 on Etsy.
Non-UK residents must report every UK property sale within 60 days, even when no tax is due.
Questions landlords ask
What is the capital gains tax rate on a buy-to-let in 2026/27?
18% on the part of the gain that fits in your unused basic rate band, and 24% on the rest, after a £3,000 tax-free allowance. Residential property no longer has separate higher rates.
When do I have to pay capital gains tax on a property sale?
Within 60 days of completion, through HMRC's online UK property service. If you're in Self Assessment, you also include it on your tax return, and the amount already paid is credited.
Can I deduct mortgage interest from the gain?
No. Mortgage interest, repairs and redecorating can't be deducted. You can deduct buying and selling costs, stamp duty, and improvements that are still there when you sell.
Can I avoid capital gains tax by transferring to my spouse?
A transfer between spouses or civil partners who live together is free of capital gains tax, and you then each have a £3,000 allowance and your own basic rate band when you sell. It reduces the bill rather than removing it. It can affect your mortgage, and stamp duty can be due if your spouse takes on part of the mortgage.