In most cases, no — you do not pay tax when you sell your house in the UK, because Private Residence Relief wipes out the gain on a property that has been your only or main home throughout the time you owned it. Capital Gains Tax only enters the picture when the property was something other than your main home for all or part of your ownership: a second home, a buy-to-let, or a property you inherited and never moved into. If CGT applies, residential property gains are taxed at 18% or 24% depending on your income, and you have 60 days from completion to report and pay.
When the Sale Is Tax-Free
Private Residence Relief is the reason the vast majority of home sales produce no tax bill. If the property was your only or main residence for your entire period of ownership, the relief covers the full gain and nothing is owed.1GOV.UK. Private Residence Relief (Self Assessment helpsheet HS283) Your ownership period runs from the date you bought the property to the date the sale completes.
Where the property was your main home for only part of the time, the relief is split proportionally. You get relief for the months you lived there and potentially owe tax on the months you didn’t. Even in that split calculation, the final nine months of ownership always qualify for relief, whether or not you were still living there.1GOV.UK. Private Residence Relief (Self Assessment helpsheet HS283) That buffer exists to protect people who move out before the sale goes through.
Absences That Still Count
Some periods away from the property can still be treated as periods of residence, provided you lived there as your main home both before and after the absence. Up to three years in total, for any reason, can qualify, and the time doesn’t have to be continuous.1GOV.UK. Private Residence Relief (Self Assessment helpsheet HS283) Additional deemed occupation can apply where you were living elsewhere for work, with different conditions depending on whether the job was in the UK or overseas. In every version of the rule, the property must have been your main residence both before and after the time away.
Mixed-Use Properties
If you used part of your home exclusively for business, or let out a self-contained section to tenants, the relief only covers the residential portion of the gain. The business or let share remains taxable. HMRC apportions the gain by how the property was actually used, so a home office that doubled as a spare bedroom usually won’t trigger a restriction, while a self-contained flat you rented out within the same building would.
When CGT Does Apply
CGT becomes an issue when the property wasn’t your main home for the whole ownership period. That typically means a second home, a buy-to-let, a property you inherited and never lived in, or a former main residence where you later moved out and let the place for a stretch longer than the nine-month tail.
For an inherited property, you don’t use the price the deceased originally paid. Your base cost is the property’s market value at the date of death, which is usually the probate value used for Inheritance Tax.2GOV.UK. Dealing with the estate of someone who’s died: Managing and selling assets Only the increase between that value and the eventual sale price is subject to CGT.
How Much You’d Pay
Residential property gains are taxed at higher rates than gains on most other assets. From 6 April 2025, the two rates are 18% for basic rate taxpayers and 24% for higher and additional rate taxpayers.3GOV.UK. Capital Gains Tax: what you pay it on, rates and allowances The previous 28% higher rate no longer applies.
Which rate you pay depends on your total taxable income for the year. Your gain is treated as the top slice of your income, sitting on top of salary, pension, rental income, and anything else. If your total income is below the basic rate band threshold of £50,270, the portion of the gain that fits within that band is taxed at 18%. Anything that pushes you above the threshold is taxed at 24%.
A worked example: taxable income of £40,000 and a taxable gain of £30,000 after relief and allowances. The first £10,270 of the gain stays within the basic rate band at 18%. The remaining £19,730 spills into the higher rate band at 24%.
Before the rate is applied, you deduct the Annual Exempt Amount. For 2025/26 this is £3,000.4GOV.UK. Capital Gains Tax rates and allowances The allowance can’t be carried forward, so unused allowance in one year is simply lost.
Working Out the Gain
The basic calculation is the sale price minus what you paid, minus allowable costs. From that gross gain you subtract any Private Residence Relief, then the Annual Exempt Amount. What’s left is the taxable gain.
Allowable costs fall into three groups:5GOV.UK. Tax when you sell your home: Work out your gain
- Purchase costs, including Stamp Duty Land Tax, solicitor fees for the conveyancing, and any surveyor or valuation fees tied to the acquisition.
- Improvement costs for work that genuinely enhanced the property’s value, such as building an extension, converting a loft, adding a new bathroom, or constructing a driveway. Routine maintenance and redecoration don’t count.
- Selling costs, meaning the estate agent’s commission and solicitor fees for completing the sale.
The line between an improvement and a repair trips people up. Replacing rotten single-glazed windows with double glazing is generally treated as a repair using the modern equivalent material. Converting a garage into a living room is an improvement because it changes the character of the property.6HM Revenue & Customs. Deductions: repairs: is it capital? If the work added something new or substantially altered what was there, it likely qualifies. If it just restored something to its previous condition, it doesn’t.
Offsetting Losses
If you sold a property at a loss, or have losses from other asset disposals, those losses can reduce a taxable gain. Losses from the same tax year are deducted first. If a gain remains above the Annual Exempt Amount, you can set off unused losses carried forward from earlier years. Losses carry forward indefinitely but can’t be carried back. Report a loss to HMRC within four years of the end of the tax year in which it happened. Losses on transactions with your spouse, civil partner, or other connected persons generally cannot be offset against gains from unrelated disposals.7GOV.UK. Capital Gains Tax: what you pay it on, rates and allowances
Couples and Jointly Owned Homes
Spouses and civil partners are each treated as separate individuals for CGT. Each person pays tax only on their own share of the gain and gets their own £3,000 Annual Exempt Amount.8GOV.UK. Capital Gains Tax civil partners and spouses On a jointly owned property, the gain is split by ownership shares, and each of you applies your own allowance and rate band independently. For a couple selling a jointly owned second home, up to £6,000 of gain is sheltered rather than £3,000.
Transferring property between spouses or civil partners while living together triggers no gain and no loss. The receiving spouse is treated as having acquired the property at the original cost, so the liability shifts rather than crystallises.8GOV.UK. Capital Gains Tax civil partners and spouses That can help if one spouse has unused basic rate band or capital losses available.
Lettings Relief
If you lived in the property at the same time as a tenant, you may qualify for Lettings Relief, which can reduce the taxable gain. The relief is capped at the lowest of three figures: the amount of Private Residence Relief you received, £40,000, or the amount of the chargeable gain attributable to the letting period.9GOV.UK. Tax when you sell your home: If you let out your home
The crucial words are “at the same time.” Since April 2020, Lettings Relief only applies where you shared the property with your tenant. If you moved out entirely and rented the whole house, the relief does not apply, no matter how long you lived there before.
If You Live Abroad
Non-UK residents still owe CGT on gains from selling UK property. Non-residents must report every disposal of UK property or land to HMRC within 60 days of completion, even where no tax is due or the sale produced a loss.10GOV.UK. Tell HMRC about Capital Gains Tax on UK property or land if you’re not a UK resident That is stricter than the rule for UK residents, who only need to report inside 60 days when there is tax to pay.
For residential properties owned before 6 April 2015, non-residents can use a rebased value as their starting cost rather than the original purchase price. The rebased value is the property’s market value as of 5 April 2015, and only the gain since that date is taxable.11GOV.UK. Work out your tax if you’re a non-resident selling UK property or land A flat bought in 2005 for £150,000 and worth £300,000 on 5 April 2015 would only produce a taxable gain measured from £300,000 upwards.
Reporting and Paying Within 60 Days
UK residents who owe CGT on a residential property sale must report the gain and pay the estimated tax within 60 days of completion. The clock starts on the day the sale legally completes, not when contracts are exchanged.10GOV.UK. Tell HMRC about Capital Gains Tax on UK property or land if you’re not a UK resident You report through HMRC’s online “Report and pay Capital Gains Tax on UK property” service, which needs a Government Gateway account.
The report needs your sale price, original cost, allowable deductions, and an estimate of your total income for the tax year so the system can split the gain between the 18% and 24% bands. Because you’re filing mid-year, that income figure is often an estimate, which makes the payment an estimate too.
If you file a Self Assessment return, you still include the gain on that return at year end. The 60-day payment is treated as a payment on account, and Self Assessment reconciles the estimate against your actual income, producing either a refund or a small top-up.
Penalties and Interest
Missing the 60-day deadline triggers an immediate £100 late filing penalty, even where the tax owed is small. After six months, a further penalty of £300 or 5% of the tax due (whichever is higher) applies, with the same again at twelve months. Late payment carries its own separate penalties: 5% surcharges at 30 days, six months, and twelve months past the deadline.
HMRC also charges interest on unpaid tax. The late payment interest rate for Capital Gains Tax is currently 7.75%, running from the date payment was due.12GOV.UK. HMRC interest rates for late and early payments The rate is set at the Bank of England base rate plus 4%, so it moves when the base rate moves. A few months of delay can add thousands of pounds to what would otherwise have been a straightforward bill.