When you sell a rental property in the UK, the main tax is Capital Gains Tax (CGT) on your profit. For the 2026 to 2027 tax year the first £3,000 of your total gains is tax-free, and the rest is taxed at 18% or 24% depending on your income. If you have tax to pay on a UK residential property, you must report it and pay it within 60 days of completion.
How much you actually pay depends on what you paid for the property, the costs you can deduct, whether you ever lived there, and who owns it. If you are a landlord in England, the Renters' Rights Act 2025 also affects how and when you can sell, because section 21 no longer exists. This guide covers both the tax and the practical side of selling a let property.
CGT is charged on the gain, not on the sale price. GOV.UK lists buy-to-let properties as a typical example of property you may pay it on, because a let property is not your home. If you own the property with someone else, you pay CGT on your share of the gain.
To find your rate, take your taxable income (income minus your Personal Allowance), add your taxable gains after the £3,000 allowance, and see how much falls inside the basic rate band. A large gain can push a basic rate taxpayer into paying 24% on part of it.
The CGT tax-free allowance (the Annual Exempt Amount) is £3,000 per person per tax year. It covers all your gains in the year, not just property.
Your gain is usually the sale price minus what you paid for the property, minus allowable costs. You use market value instead in some situations, for example if you were given the property, inherited it without a known Inheritance Tax value, or owned it before April 1982.
HMRC allows the costs of buying, selling and improving the property. In practice that includes:
You cannot deduct normal maintenance such as redecorating, or interest on the mortgage you used to buy the property. You also cannot deduct anything that was allowable against your rental income for Income Tax, so costs you have already claimed as letting expenses do not count a second time. If you are unsure about a particular cost, HMRC suggests contacting them.
These figures are illustrative. Suppose you bought a house to let for £300,000, paying £15,000 in Stamp Duty and buying fees. You later spent £9,000 adding a conservatory. You sell for £360,000 and pay £6,000 in agent and legal fees.
Keep the paperwork. HMRC says you should keep receipts, invoices and contracts showing what you paid, any Stamp Duty, fees and improvement costs, and what you received. You must try to recreate records that have been lost.
Private Residence Relief (PRR) only applies if the property was your only or main residence at some point while you owned it. If it was, you get relief for the years you lived there and, for sales on or after 6 April 2020, for the last 9 months of ownership even if you had moved out (36 months in some cases involving disability or long-term care). The rest of the gain is usually chargeable in proportion to the time it was let, although periods away of up to 3 years can still qualify if you lived there before and after (see our guide to the property 36-month rule).
GOV.UK gives this example: you make a £120,000 gain on a home you owned for 15 years, living there for 7.5 years and letting it for 7.5 years. Relief covers 8.25 years (the time you lived there plus the final 9 months), which is 55% of the ownership period. So £66,000 of the gain is relieved and £54,000 is chargeable.
Since 6 April 2020, letting relief only applies if you lived in the property at the same time as your tenant, for example if you let out a room in a house you were living in. It is not available for any period when the whole property was let. Where it applies, it is the lowest of the PRR you get, £40,000, or the gain arising from the letting. Most landlords selling a property they let out in full will not qualify.
Living with a lodger who shares your living space, or with your own children or parents who pay you rent, does not count as letting out your home for these rules.
Each owner works out the gain on their own share and reports it themselves. Each individual has their own £3,000 allowance, and each owner's rate depends on their own income, so the same property can produce a different tax bill for each owner.
You do not usually pay CGT on assets you give or sell to your spouse or civil partner, unless you were separated and did not live together at all in that tax year. When they later sell, their gain is based on what you originally paid. Some couples move a share to the lower-earning partner before a sale so that two allowances and more of the 18% band can be used. Be careful: if the person receiving the share takes on part of the mortgage, their share of the debt counts as payment for Stamp Duty Land Tax. The 5% higher rates do not apply between spouses or civil partners who live together, so SDLT is only payable if that share of the mortgage is over £125,000. Take advice before doing this.
If you sell a UK residential property and have CGT to pay, you must report and pay it within 60 days of completion, using a Capital Gains Tax on UK property account on GOV.UK. Late reporting or payment can mean interest and a penalty.
One detail catches people out. For CGT, the date of disposal under an unconditional contract is the date contracts are exchanged, not completion. That date decides which tax year the gain falls in, and so which allowance and rates apply. The 60-day clock, however, runs from completion.
The sale itself is normally a CGT matter, but your rental profits up to the sale are still property income for Income Tax. Finance Act 2026 has introduced separate Income Tax rates for property income from 6 April 2027: 22% basic rate, 42% higher rate and 47% additional rate, compared with the main rates of 20%, 40% and 45%. These rates apply to taxpayers in England and Northern Ireland. From the 2027 to 2028 tax year the Scottish Parliament and the Senedd set the property income rates for Scottish and Welsh taxpayers.
If your business is buying and selling property, for example as a developer, you do not pay CGT on the sale. You pay Income Tax as a sole trader or partner, or Corporation Tax as a limited company.
Some landlords look at incorporating rather than selling. It is not a simple paperwork change. A company you control is a connected person, so a transfer to it is normally treated for CGT as a sale at market value, and Stamp Duty Land Tax is generally charged on at least the market value too. Incorporation relief can postpone the CGT, but only where a whole business is transferred as a going concern in exchange for shares, and for transfers from 6 April 2026 it must be claimed. Whether that works for you depends on your circumstances, so get specialist tax advice first.
This section covers England, where the Renters' Rights Act 2025 changes came into effect on 1 May 2026. Wales, Scotland and Northern Ireland have their own rules. Since 1 May 2026, all assured shorthold tenancies have become assured periodic tenancies, and you can no longer use a section 21 notice. To end a tenancy you need a legal ground for possession. Our guide to what the Renters' Rights Act means for Cambridge landlords covers the wider changes.
You can sell a let property with the tenants staying. The tenancy and its terms pass to the buyer, who becomes the landlord and must tell the tenant in writing of their name and address within two months of the sale, or by the next rent day if that is later. Your buyer is likely to be an investor, and they will want to see the tenancy agreement, the deposit protection details, the rent history and the safety certificates. They take on the tenancy as it stands: rent can only be increased once a year, using the section 13 process with Form 4A and at least 2 months' notice. We go into more detail in selling a property with tenants in situ.
If you want to sell empty, the ground to use is Ground 1A (sale of the property). The main rules are:
In practice, plan the sale at least 4 months ahead and longer if the tenancy is new or there is any chance you will need a court order. Talk to your tenants early. Agreeing viewing times with them and keeping them informed makes a tenanted sale far smoother, and some tenants may want to buy the property themselves.
HM Land Registry's UK House Price Index puts the average price in the Cambridge local authority area at £475,151 in July 2026, unchanged on a year earlier. Flats and maisonettes averaged £298,575, down 2.3% over the year. Ten years earlier, in July 2016, the averages were £436,907 overall and £306,564 for flats. On those index figures, a typical Cambridge flat bought in 2016 would be worth slightly less now, and once buying and selling costs are deducted some landlords may have a loss to report rather than a gain. Houses have performed differently, so the outcome depends heavily on the property type and when you bought.
That is why an accurate current value matters before you decide anything. Our team can give you a free valuation of your rental property and talk through whether a tenanted or vacant sale suits you. If you want to keep the property but hand over the day to day, our lettings service for landlords may be the alternative, and if you are buying or selling as an investor, see our property investment service.
This article is general information, not tax or legal advice. Speak to a tax adviser or accountant about your own circumstances, and to a solicitor before serving notice on a tenant.
Capital Gains Tax on the gain after allowable costs. For 2026 to 2027 the first £3,000 of total gains is tax-free, and the rest is taxed at 18% or 24% depending on your income. Rental profits up to the sale are taxed as income in the usual way.
If there is tax to pay on a UK residential property, you must report and pay it within 60 days of completion, using a Capital Gains Tax on UK property account. Interest and penalties can apply if you are late.
Only if you lived in the property at the same time as your tenant. Since 6 April 2020 it does not cover periods when the whole property was let, and it is capped at £40,000.
Not fully. Private Residence Relief covers the time it is genuinely your main home, plus the last 9 months of ownership. Years it was let are usually chargeable, although if you lived there before letting it and move back afterwards, up to 3 years away can still qualify. You get no relief if you bought the property just to make a gain.
Yes. The tenancy passes to the buyer, who becomes the new landlord. Buyers of tenanted homes are often investors, so the pool of buyers is different from a vacant sale.
In England, at least 4 months under Ground 1A, and the notice cannot expire before the tenancy is 12 months old. After using this ground you cannot re-let or market the property to let until 12 months after the date in the notice.
