CGT Rates At 18% And 24%: How Your Salary Decides The Rate On Your Property Gain
CGT Rates at 18% and 24%: How Your Salary Decides the Rate on Your Property Gain in the UK
For the 2026/27 tax year, Capital Gains Tax (CGT) on residential property is charged at 18% on gains falling within the basic rate band and 24% on gains above it. The rate that applies to your property gain is not fixed: it depends on how much of the basic rate band has already been used by your income in the same tax year. A higher salary means less unused band, which pushes more of your gain into the 24% bracket.
How the Basic Rate Band Works for CGT
The basic rate band for income tax in 2026/27 runs from £12,570 (the personal allowance) to £50,270, giving a band of £37,700. For CGT purposes, the capital gain sits on top of your taxable income for the year. Only the portion of the gain that falls within the unused part of the basic rate band is charged at 18%. Anything above that limit is charged at 24%.
As confirmed on the CGT rates guidance on GOV.UK, gains from residential property that do not qualify for Private Residence Relief (PRR) are taxed at 18% for basic and non-taxpayers and 24% for higher and additional rate taxpayers. The stacking rule means these labels are slightly misleading: you can be an effective basic-rate taxpayer on part of a gain and a higher-rate taxpayer on the rest, within the same tax year.
The practical effect is straightforward. If you earn £35,000 of salary (taking you to £22,430 of taxable income after the personal allowance of £12,570), you have £37,700 minus £22,430 = £15,270 of unused basic rate band remaining. If you then realise a property gain of £80,000 after the annual exempt amount (see below), the first £15,270 is charged at 18% and the remaining £64,730 is charged at 24%.
The Annual Exempt Amount and Why It Still Matters
Before the stacking calculation begins, the Annual Exempt Amount (AEA) is deducted from the net gain. For 2026/27, the AEA is £3,000. This applies to each individual, and it is deducted from the top of the gain, reducing the chargeable amount in full before the rate bands are applied.
The AEA has fallen significantly from its peak of £12,300 before the 2022 Autumn Budget, which means far more property sellers now have taxable gains than in previous years. A gain of £3,000 or less on a property disposal in 2026/27 generates no CGT at all, but this only applies to relatively modest disposals or those with high acquisition and allowable costs.
What this Widget is About: This interactive UK Capital Gains Tax (CGT) calculator, created by My Tax Accountant, visually demonstrates how your annual salary directly dictates whether your residential property profit is taxed at 18% or 24% for the 2026/27 tax year. By simply entering your total taxable earnings alongside your net property gain, the tool models HMRC’s stacking rules in real time, automatically applying your £3,000 Annual Exempt Amount and calculating your available basic rate band headroom. You can also adjust the pension contribution slider to explore how extending your tax band can actively shelter your gains from the 24% higher bracket, while keeping track of your mandatory 60-day HMRC reporting deadline.
Working Through the Stacking Calculation in Practice
The worked examples below use 2026/27 figures throughout. Three different income scenarios show how dramatically the split between 18% and 24% can shift.
Scenario A: Lower salary, larger basic rate band headroom
Employment income: £28,000. Taxable income after personal allowance: £28,000 - £12,570 = £15,430. Basic rate band available: £37,700 - £15,430 = £22,270. Property gain: £60,000. After AEA of £3,000: chargeable gain £57,000. First £22,270 charged at 18%: tax = £4,008.60. Remaining £34,730 charged at 24%: tax = £8,335.20. Total CGT: £12,343.80.
Scenario B: Higher salary, no basic rate band headroom
Employment income: £75,000. Taxable income after personal allowance: £62,430. This is already above the basic rate band limit of £50,270. Basic rate band available: nil. Property gain: £60,000. After AEA: chargeable gain £57,000. Entire £57,000 charged at 24%: tax = £13,680.
Scenario C: Self-employed with modest income and same gain
Self-employment profit: £18,000. Taxable income after personal allowance: £5,430. Basic rate band available: £37,700 - £5,430 = £32,270. Property gain: £60,000. After AEA: chargeable gain £57,000. First £32,270 at 18%: tax = £5,808.60. Remaining £24,730 at 24%: tax = £5,935.20. Total CGT: £11,743.80.
The gap between Scenario A and Scenario B is approximately £1,336 on the same property gain, purely because of different salary levels. Scenario C demonstrates why a self-employed landlord with a lean income year can find themselves paying noticeably less CGT than a salaried individual with the same gain, even though both are within what might broadly be called the same income demographic.
UK Capital Gains Tax Rates on Residential Property by Income Band
Taxpayer Income Band | CGT Rate on Residential Property | Annual Exempt Amount (2026/27) |
Basic Rate (Total taxable income up to £50,270) | 18% | £3,000 |
Higher Rate (Total taxable income between £50,271 and £125,140) | 24% | £3,000 |
Additional Rate (Total taxable income above £125,140) | 24% | £3,000 |
Trustees or Personal Representatives (Including Trusts) | 24% | £1,500 (Trusts) |
Planning Opportunity: Timing the Disposal Around Income
The stacking rule creates a genuine planning window. If you can choose when to sell a property, selling in a year when your income is lower preserves more basic rate band capacity, meaning more of the gain falls at 18% rather than 24%.
Common situations where this matters:
A contractor expecting a quiet year before a new role starts might have significantly lower income in that period. Completing the sale in that calendar year, or more precisely in the right tax year, can shift a meaningful portion of the gain from 24% to 18%.
Someone approaching retirement who reduces working hours or moves to part-time employment in one tax year has less income stacking against the gain. Timing the sale to coincide with the transition year, rather than the last full-employment year, saves tax.
A landlord who has rental income every year alongside a property sale needs to account for that rental income in the stacking calculation. If rental income of £15,000 is received in the year of sale, that further erodes the basic rate band available to the capital gain.
The timing decision is only valuable where the seller has genuine flexibility over completion dates. In a sale subject to a chain, the timing may be fixed. But for an investment property held outside a chain, or a disposal to a known buyer, the timing flexibility is real and worth modelling properly.
Property Capital Gains Tax isn't charged at one flat rate. It depends on how much of your basic rate band your income has already used up in the same tax year, which means the same gain can cost two different sellers very different amounts of tax. This calculator lets you enter your income and your gain to see exactly how much falls at 18% and how much at 24%, along with the total bill. You can also flag if you're a Scottish taxpayer or add a pension contribution to see how each affects your split.
Pension Contributions as a Tool to Extend the Basic Rate Band
A personal pension contribution made in the same tax year as the property disposal can increase the basic rate band available against the gain. This is because personal pension contributions attract basic rate tax relief by extending the basic rate band rather than by deducting from income.
For each £1,000 of gross pension contribution, the basic rate band extends by £1,000, shifting £1,000 of the capital gain from the 24% CGT bracket to the 18% CGT bracket. The net tax saving per £1,000 of gross contribution moved between brackets is therefore 6% (the difference between 24% and 18%), which equals £60 of CGT saved per £1,000 of gross contribution.
On its own, this is a relatively modest saving. But it combines with the pension tax relief itself. A higher-rate taxpayer making a pension contribution gets 40% income tax relief on the contribution (or the Scottish equivalent at up to 42%), and also saves 6% CGT on the gain shifted into the lower bracket. The combined effect can make pension contributions a material planning tool in the year of a property sale.
The pension contribution must be a qualifying personal pension contribution paid before the end of the tax year (5 April 2027 for 2026/27 disposals). The extension to the basic rate band is automatic and does not require a claim or election.
Scottish Taxpayers: A Different Band Structure
For Scottish residents, the income tax band structure differs materially from England and Wales, and this affects the CGT stacking calculation. CGT itself is not devolved and the rates of 18% and 24% apply to Scottish taxpayers identically. But the point at which the basic rate band is exhausted differs.
For 2026/27, Scottish income tax rates and bands are: Starter rate (19%): £12,571 to £14,876. Basic rate (20%): £14,877 to £26,561. Intermediate rate (21%): £26,562 to £43,662. Higher rate (42%): £43,663 to £75,000. Advanced rate (45%): £75,001 to £125,140.
For CGT purposes, HMRC uses the UK basic rate band limit of £50,270 as the threshold at which the higher CGT rate of 24% applies, regardless of Scottish income tax bands. A Scottish taxpayer earning £40,000 is paying income tax at the Scottish intermediate rate of 21% on the top portion of their earnings, but for CGT stacking purposes they still have headroom in the UK basic rate band because their income has not exceeded £50,270. The gain stacks using the UK threshold, not the Scottish one.
This means a Scottish taxpayer on £40,000 income has the same CGT band calculation as an English taxpayer on £40,000, even though they pay income tax at 21% rather than 20% on some of their salary. The devolved income tax rates do not change the CGT stacking threshold.
Where Scottish taxpayers paying the higher rate of 42% (income above £43,662) sell a property, the position is the same as for any UK higher-rate taxpayer: the entire gain falls at 24% because the basic rate band has been exceeded. HMRC's CGT guidance for Scotland confirms that the UK basic rate band limit applies for CGT purposes.
Welsh income tax rates for 2026/27 are set at equivalent levels to England, so no adjustment is required for Welsh taxpayers.
The 60-Day Reporting Rule and Payment Deadline
For property disposals, CGT must be reported and paid within 60 days of completion using HMRC's UK Property Reporting Service. This applies even where the full tax position for the year has not yet been finalised, because other income for the year may not be known until the tax return is prepared later.
The 60-day submission requires an estimate of the CGT due based on the expected income for the full tax year. If the estimate is wrong (because income turns out higher or lower than expected), the final position is corrected on the Self Assessment return. There is no additional penalty for a well-reasoned initial estimate that differs from the final figure, but deliberate underestimates can attract HMRC attention.
The 60-day deadline runs from legal completion, not from exchange of contracts. A property that exchanges in March 2027 and completes in April 2027 has a CGT liability arising in the 2027/28 tax year, with the 60-day clock starting at completion in April.
Where a seller is uncertain about their income for the rest of the year at the time of reporting (a common situation for the self-employed or those with variable earnings), using a conservative estimate of income, which assumes income is higher and therefore the basic rate band is smaller, avoids inadvertent underpayment and the associated interest that accrues from the due date.
Key Takeaways
For 2026/27, CGT on residential property gains is charged at 18% within the basic rate band and 24% above it. The basic rate band runs to £50,270 of total income. The gain stacks on top of taxable income for the year to determine the split.
The Annual Exempt Amount is £3,000. It is deducted from the gain before the rate bands are applied.
Higher salary means less unused basic rate band and more of the gain taxed at 24%. A landlord on £75,000 pays 24% on the entire gain. A part-time worker on £25,000 selling the same property pays 18% on the first £25,270 of the gain and 24% on the rest.
Personal pension contributions extend the basic rate band, shifting gain from 24% to 18%. Each £1,000 of gross pension contribution saves £60 of CGT, in addition to the income tax relief on the contribution itself.
Scottish taxpayers use the UK basic rate band limit of £50,270 for CGT stacking, regardless of Scottish income tax bands. Scottish higher-rate taxpayers (income above £43,662) pay 24% on all residential property gains.
Property CGT must be reported and paid within 60 days of completion using HMRC's UK Property Reporting Service. The 60-day clock starts from legal completion, not exchange.
FAQs
What CGT rate do I pay on a property gain in 2026/27?
The rate depends on your income. Gains falling within the unused basic rate band (up to £50,270 of total income for 2026/27) are taxed at 18%. Gains above that threshold are taxed at 24%. If your income already exceeds £50,270, the entire gain is taxed at 24%.
How does my salary affect my CGT rate on a property sale?
Your salary fills up the basic rate band before the capital gain is added. The more salary you earn, the less of the basic rate band remains for the gain to sit in at 18%. A salary of £50,270 or above means the entire gain is pushed into the 24% bracket.
Can I reduce my CGT by making pension contributions?
Yes. Personal pension contributions extend the basic rate band on a pound-for-pound basis, moving gain from the 24% bracket to the 18% bracket. Each £1,000 of gross contribution shifts £1,000 of gain to the lower rate, saving £60 of CGT, on top of the standard income tax relief on the pension contribution itself.
Does my salary in Scotland affect CGT differently?
The CGT rates and thresholds are UK-wide. Scottish income tax rates do not change the CGT stacking calculation: HMRC uses the UK basic rate band limit of £50,270, regardless of which Scottish income tax band you fall into. A Scottish taxpayer on £40,000 has the same CGT position as an English taxpayer on £40,000.
What is the Annual Exempt Amount for CGT in 2026/27?
The Annual Exempt Amount is £3,000 for 2026/27. This is deducted from the net gain before the rate bands are applied. A property gain of £3,000 or less generates no CGT after the exemption is used.
When do I have to pay CGT on a property sale?
CGT on residential property must be reported and paid within 60 days of legal completion using HMRC's UK Property Reporting Service. The 60-day countdown starts from the date of completion, not exchange of contracts. The final CGT position is then confirmed on the Self Assessment return for the tax year.
What if I'm unsure how much income I'll earn in the rest of the year when I sell a property?
You must still submit the 60-day report using an estimate. Using a conservative estimate (assuming higher income and therefore less basic rate band) reduces the risk of underestimating the CGT due. Any overpayment is refunded through the Self Assessment return after the year ends. Deliberate underestimates attract interest from the 60-day due date.
Does the CGT rate apply to all property gains, or just investment properties?
The 18% and 24% rates apply specifically to residential property gains that are not covered by Private Residence Relief. If the property was your main home throughout the period of ownership, PRR may eliminate the gain entirely. For investment properties, buy-to-let properties, or second homes, the rates apply to the chargeable portion of the gain after PRR and the Annual Exempt Amount are considered.
About the Author
Maz Zaheer, AFA, MAAT, MBA, is the CEO and Chief Accountant of MTA and Total Tax Accountants, two premier UK tax advisory firms. With over 15 years of expertise in UK taxation, Maz provides authoritative guidance to individuals, SMEs, and corporations on complex tax issues. As a Tax Accountant and an accomplished tax writer, he is renowned for breaking down intricate tax concepts into clear, accessible content. His insights equip UK taxpayers with the knowledge and confidence to manage their financial obligations effectively.
Disclaimer:
This article explains the general position for the 2026/27 tax year and is accurate at the date of publication. Tax outcomes depend on individual circumstances, and rules change. It is not advice for your situation. For guidance on your own position, speak to a qualified accountant or tax adviser. My Tax Accountant accepts no liability for action taken solely on the basis of this article.
