What is the current CGT allowance for 2025/26?

The annual CGT allowance for 2025/26 is just £3,000, down from £12,300 in 2022/23. This means any gains above £3,000 in a tax year are taxable, drawing far more property sellers into the CGT net than ever before.

What are the current CGT rates for property in 2026?

For property disposals in 2025/26, the basic rate CGT is 18% (up from 10% pre-October 2024) and the higher/additional rate is 24% (up from 20%). Residential property gains are taxed at these rates, while carried interest and other assets have different rates.

How can landlords reduce their CGT bill when selling property?

Key strategies include: using both spouses' allowances before disposing of assets, making full use of ISAs and pensions for non-property investments, keeping meticulous records of capital improvements (which reduce the gain), considering timing across tax years to use two annual allowances, and ensuring Principal Private Residence Relief is claimed correctly if the property was ever your main home.

Does incorporating into an SPV company help with CGT?

Holding property through a limited company (SPV) shifts taxation from CGT to Corporation Tax on disposals, which is currently 25% for profits above £250,000. The trade-off involves ongoing compliance costs, stamp duty on transfer, and different rules for extracting proceeds as dividends. Incorporation decisions should be based on individual portfolio size and exit timeline.

Why have CGT receipts risen so dramatically in 2026?

HMRC data shows CGT receipts reached £24.3 billion in 2025/26 — up 77% from the previous year and 244% from a decade ago. The jump is driven by three factors: the annual allowance being slashed from £12,300 to £3,000, CGT rates increasing from 10%/20% to 18%/24% in October 2024, and accelerated asset sales as sellers locked in known rates ahead of Labour budget speculation.

Capital Gains Tax Soars 77% — Property Investor Guide 2026

The short version: HMRC collected £24.3 billion in Capital Gains Tax in 2025/26 — a staggering 77% increase year-on-year and 244% higher than a decade ago, according to data analysed by Hargreaves Lansdown. The explosion in CGT receipts is being driven by three converging factors: the annual allowance has been slashed to just £3,000 (down from £12,300 in 2022/23), rates were hiked in October 2024 (basic rate from 10% to 18%, higher rate from 20% to 24%), and many asset holders accelerated sales ahead of Labour's Budgets amid fears of further increases. For UK property investors, the numbers represent a structural shift in how much tax you will pay when you sell — and whether you have a strategy to minimise it.

Clare Stinton, senior personal finance analyst at Hargreaves Lansdown, notes that CGT can apply not only when selling an investment, but also when gifting an investment to anyone other than a spouse or civil partner. The £3,000 allowance means even modest property gains are now captured, and the higher rates ensure a far larger share of the proceeds goes to the Treasury.

Below, we unpack the numbers, explain what changed, and walk through the practical strategies property investors can use to manage their CGT exposure in this new higher-tax environment.

What the new HMRC figures actually show

The headline figure is the most striking: CGT receipts of £24.3 billion for the 2025/26 tax year. To put that in context, the Treasury collected just £13.7 billion the previous year — meaning the year-on-year increase is £10.6 billion, or 77%. Over a ten-year horizon, the increase is 244%, reflecting both policy changes and asset price growth that has pushed more disposals over the threshold.

Three structural drivers explain the leap:

Allowance collapse: The annual CGT-free allowance fell from £12,300 in 2022/23 to £6,000 in 2023/24, then £3,000 in 2024/25 and remains at £3,000 for 2025/26. This single change has pulled hundreds of thousands of additional taxpayers into the CGT net, including many small-scale property investors who previously fell below the threshold.
Rate increases: The October 2024 Budget raised the basic rate of CGT from 10% to 18% and the higher rate from 20% to 24% for property disposals. These are the rates that apply to residential property gains, meaning the tax bill on every sale above the allowance has increased by roughly 40-80% depending on your tax bracket.
Accelerated disposals: Hargreaves Lansdown's analysis notes that some asset holders brought forward sales to lock in known rates ahead of Labour's Budgets, amid speculation that CGT rates could rise further. This created a temporary spike in chargeable disposals that may not be sustained at the same level in future years, but the baseline is now permanently higher.

The consultancy also highlights that when disposing of long-term assets, the gains involved can be substantial — years of market growth with no adjustment for inflation — meaning even modest properties bought a decade ago can easily exceed the £3,000 allowance. That is the mechanism that is drawing in property sellers who never previously worried about CGT.

CGT receipts have risen 244% in a decade. The allowance has fallen from £12,300 to £3,000. The rates have risen from 10%/20% to 18%/24%. This is not a blip — it is a structural change in the tax landscape for property investors.

How the CGT changes affect property investors specifically

Residential property gains are treated differently from gains on other assets for CGT purposes. The rates for property (18% basic, 24% higher) are higher than the standard CGT rates (10% basic, 20% higher) that apply to shares and other investments. This means property investors are disproportionately affected by the rate hikes.

For a landlord selling a buy-to-let property that has appreciated by, say, £100,000 over a decade of ownership, the CGT calculation in 2025/26 looks like this:

Chargeable gain: £100,000
Less annual allowance: £3,000
Taxable gain: £97,000
Tax at 24% (higher rate): £23,280

Under the pre-October 2024 regime, the same sale would have been taxed at 20% on £87,700 (£100,000 less £12,300 allowance) = £17,540. The difference is £5,740 — a 33% increase in the tax bill on exactly the same gain, purely from policy changes.

For portfolio landlords with multiple properties, the cumulative impact is substantial. A landlord selling three properties with similar gains faces an additional £17,220 in tax compared to the pre-2024 regime. That is real money that could have been reinvested or used to improve retained stock.

Understanding what counts as a chargeable gain

CGT is payable on the gain — the difference between what you paid for an asset and what you sold it for — not the total sale proceeds. For property, the calculation includes several adjustments that can significantly reduce the taxable gain if properly documented.

Allowable costs that reduce your gain:

Purchase price — what you originally paid, including stamp duty, legal fees, and survey costs at acquisition
Capital improvements — structural improvements, extensions, new kitchens or bathrooms, loft conversions, new heating systems. These must be capital improvements, not repairs or routine maintenance (which are revenue expenses and treated differently)
Sale costs — estate agent fees, legal fees on sale, and any EPC or compliance certifications needed to complete the sale
Indexation allowance — for properties held by companies, indexation allowance may apply (but this was frozen for individuals from April 2018, so individual landlords cannot use it for post-2018 gains)

Where many investors get caught out is failing to keep records of capital improvements over the ownership period. A new roof costing £8,000, a kitchen replacement at £12,000, and a new boiler at £3,500 — these all reduce the chargeable gain, but only if you have the invoices to prove them. HMRC's digital tax records requirements make accurate record-keeping essential, and we covered the broader compliance landscape in our 2026 property tax guide.

Spousal transfers and allowance splitting

One of the most effective but underused CGT-minimisation strategies for married couples and civil partners is the spousal transfer. Assets can be transferred between spouses or civil partners without triggering a CGT charge — the transfer is deemed to take place at a value that produces no gain and no loss for the donor.

The practical implication is significant: if one spouse holds investment property in their sole name and has substantial gains, transferring half the ownership to the other spouse before a sale effectively doubles the annual allowance from £3,000 to £6,000, and may allow the lower 18% rate to apply to part of the gain if the receiving spouse has a lower income in that tax year.

This strategy requires advance planning — transferring just before completion is not sufficient, and the transfer must be genuine with the spouse becoming a legal joint owner. But for married landlords with significant gains crystallising in a single tax year, it is one of the few legitimate tools available to reduce the bill without restructuring the entire ownership structure.

Should you sell through a limited company (SPV)?

One question that arises frequently in the current environment is whether holding property through a limited company (SPV) structure reduces the tax hit on disposal. The answer is nuanced.

When a limited company sells a property, the gain is subject to Corporation Tax rather than CGT. The current Corporation Tax rate is 25% for profits above £250,000 (with marginal relief between £50,000 and £250,000). At 25%, this is very close to the 24% higher-rate CGT for individuals — so the disposal tax rate is not the deciding factor. The real difference is what happens when you want to extract the proceeds from the company: dividend tax applies on top, meaning the total effective tax rate on a property sold through an SPV can be higher than the direct CGT charge.

Where SPVs do offer advantages is in ongoing tax management: mortgage interest is fully deductible against rental income (unlike individual landlords who lost this under Section 24), and the spread of gains across multiple tax years can be managed through dividend timing. However, the transfer of existing personally-held property into an SPV itself triggers a CGT event (and stamp duty), so the decision is best made before acquisition, not retrospectively.

For a full comparison of personal versus SPV ownership models, including worked examples of the numbers at different portfolio sizes, our BTL mortgage guide includes a lender criteria section that covers how SPVs are treated by different lenders.

Principal Private Residence Relief — still the biggest property CGT exemption

The most valuable CGT relief for property owners is Principal Private Residence (PPR) Relief, which exempts gains on your main home from CGT entirely. For landlords who have ever lived in a property before letting it out, the final 9 months of ownership qualify for PPR relief regardless of whether you are living there at the time — so if a property was your main home at any point, the last 9 months of ownership are automatically CGT-free.

For properties that have been both a main home and a rental at different times, the gain is apportioned between the periods. Lettings Relief was significantly restricted from April 2020 and is now only available where the landlord is in shared occupancy with the tenant — so for most standard BTL situations, it no longer applies.

If you have a property that was once your main home and is now rented out, selling it while you still own another property you have never lived in means you need to carefully track the periods of occupation versus letting. HMRC's guidance on PPR relief runs to several thousand words, and we strongly recommend professional advice for any sale involving mixed-use history.

Practical strategies for minimising CGT in 2026

With the allowance at £3,000 and rates at 18%/24%, CGT planning is no longer optional for property investors. The following strategies are worth discussing with your accountant before your next disposal:

Stagger disposals across tax years. Each individual has a £3,000 allowance per tax year. If you are selling multiple properties, spreading the sales across April and May rather than completing them all in March doubles your available allowance. The savings can be significant — two properties sold across two tax years rather than one saves one full allowance.
Use both spouses' allowances. Joint ownership gives each spouse their own £3,000 allowance, effectively doubling the tax-free threshold to £6,000. Transferring ownership before sale is CGT-free between spouses.
Maximise capital improvement claims. Every improvement you have made — from a new boiler to a loft conversion — reduces the chargeable gain. But you need the paperwork. Go through your records before instructing a sale and ensure all improvement costs are documented.
Consider timing relative to income. If your total taxable income in a given year is below the higher-rate threshold (£50,270 in 2025/26), part of your gain may be taxed at 18% rather than 24%. Timing a sale for a lower-income year can save thousands.
Gifting to a spouse before death. On death, assets pass to beneficiaries with a CGT-free uplift to market value — the beneficiary inherits at the probate value, not the original purchase price. This is a consideration for longer-term estate planning rather than active portfolio management, but it is a legitimate strategy for older investors.

For running the numbers on how different sale prices, improvement costs and ownership structures affect your net proceeds, our property calculators include a capital gains tax estimator that models the key variables. And for a deeper look at how the wider regulatory environment interacts with tax planning, our comprehensive property tax guide covers SDLT, corporation tax, and the interaction between Section 24 restrictions and capital allowances.

The bottom line for property investors

CGT is structurally higher. The £3,000 allowance and 18%/24% rates are not temporary — they reflect a deliberate policy choice to raise revenue from asset disposals. Plan accordingly.
The £3,000 allowance catches almost everyone. A property bought for £150,000 and sold for £170,000 — a £20,000 gain that is modest by any standard — produces a £17,000 taxable gain, or £4,080 at higher rate. Nearly every property investor is now affected.
Documentation is everything. Capital improvements, acquisition costs, and sale costs all reduce the gain, but only if you have the records. Set up a simple spreadsheet per property from day one tracking all capital expenditure.
Professional advice is highly recommended. CGT on property is one of the most complex areas of UK tax law, with interaction between principal private residence relief, lettings relief, spousal transfers, incorporation, and inheritance tax. A good accountant will save you more than they cost.
Don't let tax drive bad investment decisions. Selling a property that is performing well purely to crystallise gains within a known tax regime is rarely the right call. The best CGT strategy is a good investment strategy that generates returns worth paying tax on.

The HMRC figures for 2025/26 make one thing clear: the era when property investors could sell with minimal CGT liability is over. The allowance is eight times smaller than it was four years ago, the rates are 40-80% higher, and the Treasury is collecting more than ever. The response is not to stop selling — it is to sell smarter, with a proper understanding of the rules and a plan to keep as much of your gain as the law allows.

For more context on how the current mortgage rate environment interacts with selling decisions — particularly if you are considering selling versus refinancing — our Paragon BTL rate cut analysis covers the latest financing costs, and our strategies section provides framework-level guidance on when to hold, when to refinance, and when to exit.