What CGT rate applies to a second home sale?
For the 2026-27 tax year, individuals pay Capital Gains Tax on residential property gains at 18% or 24%, a two-tier structure that has not changed since 6 April 2024. Which rate applies depends on your total taxable income plus the gain itself, not on the gain alone.
The 18% rate covers the portion of your gain that fits inside your remaining basic-rate band, meaning the gap between your taxable income and the £50,270 higher-rate threshold for 2026-27. Once your income and gain together push past that threshold, the excess is taxed at 24%. A basic-rate taxpayer with a large enough gain can therefore pay both rates on a single sale: 18% on the slice that fits inside the band, 24% on the rest.
| Taxpayer position | Rate on the gain |
|---|---|
| Gain (plus income) stays within the basic-rate band | 18% |
| Gain (or the portion of it) pushes above the basic-rate band | 24% |
These are the rates for residential property specifically. Other assets, such as shares, have separate CGT rates that are not covered here.
How is the gain calculated?
The starting point is sale price minus purchase price minus allowable costs. Allowable costs generally include:
- Legal and estate agent fees on both the purchase and the sale.
- Stamp Duty Land Tax (or the equivalent) paid on purchase.
- Capital improvements that add value and are still reflected in the property when sold, such as an extension or a new kitchen where none existed. Routine repairs and maintenance do not count.
From that gain, Private Residence Relief and, where it applies, Lettings Relief are deducted, then the £3,000 Annual Exempt Amount is applied before the remaining gain is split across the 18% and 24% bands. Keeping receipts for improvement work and professional fees for the whole period of ownership is what makes this calculation defensible if HMRC asks for evidence.
What is Private Residence Relief and the final 9 months?
Private Residence Relief (PRR) exempts the portion of your gain that relates to periods when the property was your only or main residence. The exempt fraction is calculated as the number of months of qualifying residence, plus an automatic final 9 months, divided by the total months you owned the property.
The final 9 months count as deemed occupation even if you had already moved out and were not living there when you sold, provided the property was your main residence at some point during your ownership. This final-period rule exists specifically so that the practical delay of selling a home does not cost you relief you would otherwise have earned.
Illustrative example: a home owned for 10 years, used as a main residence for the first 4 years and then let out or used as a second home for the remaining 6, would have roughly 4 years plus 9 months of deemed occupation out of 10 years of ownership treated as exempt under PRR, before any other relief or the annual exemption is applied.
Can you nominate which home is your main residence?
If you own more than one home that you actually live in at different times, only one property at a time can be your main residence for PRR purposes. Where it is genuinely unclear which one that is, you can send HMRC a formal nomination stating which property you are treating as your main residence.
The nomination must be made within 2 years of the combination of properties changing, for example from the date you acquire a second home you actually live in. Miss that 2-year window and HMRC will instead decide the question of fact based on where you actually lived most, which removes your ability to choose the more tax-efficient property. A property bought purely as an investment or a holiday let that you never live in is not eligible for this nomination at all, because PRR only ever applies to a home you have actually occupied as a residence.
What is Lettings Relief now?
Lettings Relief used to reduce the CGT bill on a home that had been both a main residence and, at another time, fully let out to tenants. Since 6 April 2020, that broad version has gone. Lettings Relief is now only available where you shared occupation of the home with your tenant during the letting period, such as taking in a lodger while you still lived there.
Where it does apply, Lettings Relief is capped at the lowest of three figures: £40,000, the amount of PRR already given on the property, or the gain arising from the letting period itself. If you moved out entirely and let the whole property to someone else, Lettings Relief is £0, even if the property was your main residence for years beforehand. This is one of the most commonly missed points among people who read older articles about selling a let former home, since the pre-2020 rule was far more generous.
What is the 60-day rule and what happens if you miss it?
UK residents who sell a residential property with CGT due must report the disposal and pay the tax within 60 days of completion, using HMRC's Report and pay Capital Gains Tax on UK property online service. This is a separate obligation from your annual Self Assessment return, and it applies even if you will also declare the gain on Self Assessment later in the year.
The 60-day clock starts on the completion date of the sale, not the date contracts were exchanged. Missing the deadline triggers an automatic late-filing penalty, followed by further fixed and tax-geared penalties the longer the return is outstanding, plus interest on any tax paid late. If your only or main home is fully covered by PRR with no gain left to report, you generally do not need to make a 60-day report at all, but if any taxable gain remains after reliefs, the report is required regardless of how small that remaining gain is.
Do non-residents pay CGT differently?
Non-UK residents disposing of UK residential property must also report the disposal within 60 days of completion, using the same online service, and this obligation applies even where no tax is ultimately due, for example because the gain is fully covered by relief or falls within the annual exemption. Non-residents generally calculate their gain from the property's value on 5 April 2015 (or later acquisition, if bought after that date) rather than from the original purchase price, which is a different starting point from the UK-resident rules described above and is not covered in detail on this page.
What can a married couple or civil partners do?
Married couples and civil partners who live together can transfer assets, including a share of a second home, between themselves at a value that creates no gain and no loss for CGT purposes. This does not remove the tax; it defers it and can allow both partners' £3,000 annual exempt amounts and basic-rate bands to be used against the eventual gain, rather than concentrating it all on one partner's tax return.
What a couple cannot do is nominate two different homes as two separate main residences at the same time while they are living together as a couple: only one home can be nominated as the couple's main residence for PRR, even if each partner separately owned a home before the relationship began. Separated or divorcing couples have their own, different set of rules for transfers and nominations, which sit outside the scope of this page.
Work out your own numbers
- UK second home CGT calculatorEnter your figures and see the estimated bill.
- Second home running costsTrack what the property has cost you to hold.
- Stamp duty on a second homeWhat you paid on the way in, for your allowable costs.
- Family property cost splitDivide costs and proceeds fairly among co-owners.
Common questions
Do you pay CGT on a second home you have never let out?
Yes, if it was never your only or main residence, the full gain is potentially taxable subject to the £3,000 annual exempt amount and any allowable costs. A property that was genuinely a main residence for part of your ownership gets Private Residence Relief for that period plus the automatic final 9 months.
Can you deduct estate agent and legal fees from the gain?
Yes, the costs of buying and selling, including legal fees, estate agent fees and Stamp Duty Land Tax paid on purchase, are allowable deductions when calculating the gain.
Does the 60-day deadline apply if you make a loss?
No report is required under the 60-day rule if there is no CGT due, for example because the disposal results in a loss or is fully covered by relief. Where any tax is due, the 60-day report and payment obligation applies regardless of the amount.
Is the £3,000 exempt amount per property or per person?
It is per individual, per tax year, across all your capital gains for that year combined, not per property. It is not something you can multiply by the number of properties you sell.
Sources
- GOV.UK, "Tax when you sell property", checked 15 September 2026.
- GOV.UK, "Capital Gains Tax rates and allowances", checked 15 September 2026: confirms the £3,000 Annual Exempt Amount for individuals for 2026-27 and the 18%/24% rate structure for residential property gains.
- HMRC helpsheet HS283, "Private Residence Relief", checked 15 September 2026: final 9-month deemed occupation rule and the £40,000 Lettings Relief cap and shared-occupation condition since 6 April 2020.
Last reviewed 15 September 2026. Next review April 2027, ahead of the 2027-28 tax year and the property income rate change covered in our holiday let tax changes guide. Written by the OwnersLog team from the official sources listed above. No professional reviewer is named on this page yet.
This guide is general information about how the rules work, not financial, tax, legal or mortgage advice, and it cannot account for your circumstances. Confirm anything that matters with a qualified professional. See the full disclaimer.