Do You Pay Tax When You Sell Your House in the UK?

In most cases, no — you do not pay tax when you sell your house in the UK, because Private Residence Relief wipes out any Capital Gains Tax on the sale of your only or main home. Tax only becomes an issue when the property wasn’t your main residence for the whole time you owned it: a second home, a buy-to-let, a property you inherited and never moved into, or a home you let out or moved out of well before selling. Where CGT does apply, residential gains are taxed at 18% or 24%, and you have 60 days from completion to report and pay.

When the Sale of Your Main Home Is Tax-Free

Private Residence Relief is what makes most home sales tax-free. If the property was your only or main residence for the entire period from purchase to the completion of the sale, the relief covers the full gain and nothing is owed.¹

There is a useful buffer built in for people whose timing doesn’t line up neatly. Even where relief would only be partial, the final nine months of ownership always qualify, whether or not you were still living in the property when the sale went through.¹ That protects sellers who have already moved out by the time completion happens.

Certain absences can also be treated as periods of occupation, provided you lived in the property as your main home both before and after. Up to three years of absence for any reason at all qualifies, and it doesn’t have to be a single stretch.¹ Extra deemed-occupation periods apply where you were away for work.

When Part of the Gain Becomes Taxable

If the property wasn’t your main home for the entire ownership period, the relief is split proportionally. You get relief for the months you lived there (plus the final nine) and potentially owe tax on the rest.

The same idea applies where you used part of the home for something other than living. Renting out a self-contained flat within the building, or setting a room aside exclusively for business, restricts the relief to the residential share. A home office that also served as a spare bedroom generally doesn’t cause a problem, because the space wasn’t used exclusively for business.

Inherited property is a common trigger. If you inherit a house and never make it your main home, any increase in value between the date of death and the date you sell is a taxable gain. Your starting figure is not what the deceased originally paid; it’s the market value at the date of death, usually the probate value used for Inheritance Tax.²

Second homes and buy-to-lets never qualified for Private Residence Relief in the first place, so the whole gain is potentially taxable.

Working Out the Gain

The calculation is: sale price, minus original cost, minus allowable costs, minus any Private Residence Relief, minus your Annual Exempt Amount. Whatever is left is the taxable gain.

Allowable costs fall into three groups:³

Purchase costs, including Stamp Duty Land Tax, conveyancing fees, and survey or valuation fees from when you bought the property.
Improvement costs — work that genuinely enhanced the property, such as an extension, a loft conversion, a new bathroom, or a driveway. Routine maintenance and redecoration do not count.
Selling costs, meaning the estate agent’s commission and the solicitor’s fees for the sale.

The improvement-versus-repair line trips people up. Replacing rotten single-glazed windows with double glazing is generally treated as a repair using the modern equivalent, so it isn’t deductible. Converting a garage into a living room is an improvement because it changes the character of the property.⁴ If the work added something new or substantially altered what was there, it likely qualifies.

Every individual then has a tax-free Annual Exempt Amount to subtract. For 2025/26 this is £3,000. It cannot be carried forward. The allowance has fallen sharply — it was £12,300 in 2022/23 and £6,000 in 2023/24 — so it now offers little shelter on a property gain of any size.⁵

How Much Tax You’ll Pay

Residential property gains are taxed at higher rates than most other assets. From 6 April 2025 the rates are 18% for basic rate taxpayers and 24% for higher and additional rate taxpayers.⁶

Which rate applies depends on your total taxable income for the year. The gain is treated as sitting on top of your income. Any part of the gain that fits below the basic rate threshold of £50,270 is taxed at 18%; anything above that is taxed at 24%. A single sale can therefore be taxed at both rates, split at the point where the gain crosses the threshold.

Ways to Reduce What You Owe

Spouses and civil partners are taxed as separate individuals for CGT. Each has their own £3,000 Annual Exempt Amount, and each is taxed at their own rate.⁷ On a jointly owned property, the gain is split according to ownership shares, so a couple selling a second home together shelters £6,000 rather than £3,000.

Transfers between spouses or civil partners who are living together happen on a no-gain-no-loss basis, meaning the receiving spouse takes on the original cost.⁷ Moving a share of ownership before sale can put unused basic rate band or capital losses to work. After a permanent separation, this treatment continues to the end of the third tax year after you stopped living together, or until divorce or dissolution is finalised, whichever comes first.

Capital losses reduce the taxable gain. Losses from the same tax year are used first; unused losses carried forward from earlier years come off next. Losses can be carried forward indefinitely but not carried back, and you need to report a loss to HMRC within four years of the end of the tax year in which it happened. Losses arising from transactions with your spouse, civil partner, or other connected persons generally cannot be set against gains from unrelated disposals.⁸

Lettings Relief is often assumed to apply to former homes that were later rented out. Since April 2020 it doesn’t. The relief is now available only where you shared the property with your tenant at the same time. Where it does apply, it’s capped at the lowest of the Private Residence Relief you received, £40,000, or the chargeable gain attributable to the letting.⁹ If you moved out entirely and let the whole property, this relief is not available regardless of how long you lived there first.

Reporting and Paying Within 60 Days

If you owe CGT on a residential property sale, you 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.¹⁰ Reporting is done through HMRC’s online “Report and pay Capital Gains Tax on UK property” service, using a Government Gateway account.

You’ll need the sale price, the original cost, all allowable deductions, and an estimate of your total income for the tax year, which is what determines the 18%/24% split. Because the return is filed part-way through the year, the income figure is often an estimate and the payment is provisional. If you file a Self Assessment return, the gain still needs to appear on it, and the 60-day payment is treated as a payment on account that gets reconciled at year-end.

Missing the deadline triggers an immediate £100 late filing penalty even if very little tax is due, with further penalties at six and twelve months. Late payment carries separate surcharges. HMRC also charges interest on unpaid tax; the current rate for late Capital Gains Tax is 7.75%, set at the Bank of England base rate plus 4%.¹¹ A few months of delay can add thousands to a bill that was otherwise routine.

If You Live Outside the UK

Non-UK residents pay CGT on gains from selling UK property in the same way, but the reporting rule is stricter: every disposal of UK property or land has to be reported to HMRC within 60 days of completion, even where no tax is due or the sale produced a loss.¹⁰ For residential property owned before 6 April 2015, non-residents can use the market value on 5 April 2015 as the base cost, so only the gain since that date is taxed.¹²

1
GOV.UK. Private Residence Relief (Self Assessment helpsheet HS283)
2
GOV.UK. Dealing with the estate of someone who’s died: Managing and selling assets
3
GOV.UK. Tax when you sell your home: Work out your gain
4
HM Revenue & Customs. Deductions: repairs: is it capital?
5
GOV.UK. Capital Gains Tax rates and allowances
6
GOV.UK. Capital Gains Tax: what you pay it on, rates and allowances
7
GOV.UK. Capital Gains Tax civil partners and spouses
8
GOV.UK. Capital Gains Tax: what you pay it on, rates and allowances
9
GOV.UK. Tax when you sell your home: If you let out your home
10
GOV.UK. Tell HMRC about Capital Gains Tax on UK property or land if you’re not a UK resident
11
GOV.UK. HMRC interest rates for late and early payments
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GOV.UK. Work out your tax if you’re a non-resident selling UK property or land