Sellers' Guide
Capital Gains Tax When Selling a Flat
Most people pay no capital gains tax when they sell the flat they live in. If the flat was let out, a second home or inherited, you may have tax to pay. This guide explains how to work out the gain, which costs you can deduct, including a lease extension, and how the relief works for a home you moved out of. It also covers the 60-day deadline for reporting the sale.
Do You Pay Capital Gains Tax When You Sell a Flat?
Capital gains tax is a tax on the profit when you sell something that has gone up in value. For most people selling the flat they live in, it never arises, because private residence relief covers your own home. But many flats are sold by landlords, by owners who moved out years ago, by executors or by people who inherited a flat, and in those cases a tax bill is likely.
This guide explains when the tax applies, how to work out the gain, which costs you can deduct, how relief works when a flat was your home for only part of the time and the 60-day deadline that catches many sellers out. Figures are for the 2026/27 tax year.
This guide is general information, not tax advice. Tax depends on your own circumstances, so take advice from an accountant or tax adviser before you sell. Tax rules can change at each Budget; the next is on 28 October 2026.
Written and kept up to date by the Sell Flat UK team at LDN Properties Ltd. Last reviewed on 9 October 2026 against GOV.UK guidance.
When You Pay, and When You Do Not
| Your situation | Capital gains tax? |
|---|---|
| Your only or main home throughout | Usually none, through private residence relief |
| A former home you moved out of and let | Partly. The years you lived there, and the last 9 months, are exempt; the rest is taxable |
| A buy-to-let you never lived in | Yes, on the whole gain |
| A second home or holiday flat | Yes, unless it was your nominated main residence |
| An inherited flat | Only on the rise in value since the date of death |
| You live abroad and sell a UK flat | Yes, on gains since April 2015, and you must report the sale even if no tax is due |
If you and your spouse or civil partner own the flat jointly, each of you is taxed on your share of the gain and you each have your own £3,000 allowance. A married couple or civil partners can only have one main home between them for the relief at any time.
How to Work Out the Gain
The gain is the sale price less what the flat cost you, including the costs of buying, improving and selling it. Tax is then charged on the gain above your £3,000 allowance.
Costs you can deduct
- the price you paid, or the value at the date of death if you inherited it;
- stamp duty land tax, solicitor's fees and survey fees when you bought;
- estate agent's and solicitor's fees when you sell, and the cost of the management pack;
- improvements that added to the flat, such as an extension, a loft conversion or a better kitchen than the one it replaced;
- the premium you paid to extend the lease, and the legal and valuation fees for the extension.
Costs you cannot deduct
- normal maintenance and repairs, such as redecorating or replacing like for like;
- mortgage interest and arrangement fees;
- service charges and ground rent;
- anything you have already claimed against rental income for income tax.
The lease extension point is the one most flat owners miss. If you extended the lease before selling, the premium paid to the freeholder and your professional fees reduce the taxable gain, which on a short lease can be tens of thousands of pounds. Keep the paperwork. Our guide on whether to extend your lease before selling covers the extension itself.
A Worked Example: Selling a Buy-to-Let Flat
A landlord bought a flat for £200,000, paying £3,000 in stamp duty and legal fees. Later they extended the lease for £15,000, including the premium and both sides' fees. They now sell the flat for £300,000, and the selling costs come to £7,500. They never lived in it.
How the £300,000 sale price breaks down
If the landlord is a higher-rate taxpayer, the whole taxable gain is taxed at 24 percent, a bill of £17,160. If they are a basic-rate taxpayer with, say, £20,000 of their basic rate band unused, that part is taxed at 18 percent and the rest at 24 percent, a bill of £15,960. Without the lease extension costs, the gain would have been £15,000 higher and the bill up to £3,600 more.
A former home
Now take an owner who bought a flat, lived in it for four years, then moved out and let it for six years before selling at a £100,000 gain. Private residence relief covers the four years they lived there plus the final nine months, so 4.75 of the 10 years, or 47.5 percent of the gain. The remaining £52,500, less the £3,000 allowance, is taxable.
Private Residence Relief, Explained
Private residence relief removes the tax on the gain for the period a flat was your only or main home. It is automatic in the simple case: if you lived in the flat as your main home the whole time you owned it, there is nothing to pay and usually nothing to report.
The final nine months
If the flat was your main home at any point, the last nine months before you sell are always covered, even if you had moved out. That helps owners whose flat takes a while to sell after a move. The period is 36 months if you are disabled, or if you are moving into long-term residential care.
Time away that still counts
Some absences are treated as if you still lived there, provided the flat was your only home and you lived in it before and after the absence:
- up to three years away for any reason;
- up to four years if you had to live elsewhere in the UK for work;
- any length of time working abroad.
If your job meant you could not move back in afterwards, the "before and after" condition can be relaxed for the work periods.
Letting it out
Letting relief used to help landlords who had once lived in the flat. Since April 2020 it only applies if you lived in the flat at the same time as your tenant, for example by letting a room, and it is capped at £40,000. If you moved out and let the whole flat, the letting period is simply taxable, apart from the final nine months.
The 60-Day Rule
This is the deadline that catches sellers out. If you sell a UK residential property and there is capital gains tax to pay, you must report the sale to HMRC and pay the tax within 60 days of completion. You do this through a separate online capital gains tax on UK property account, not just on your tax return.
- Completion day. The 60-day clock starts.
- Work out the gain. Gather the purchase, improvement and sale figures, ideally with your accountant.
- Report and pay by day 60. Use the GOV.UK service. Interest and penalties apply if you are late.
- Include it on your tax return. If you file a Self Assessment return, you must also include the sale there.
If you live abroad, you must report a sale of UK property within 60 days even if no tax is due. If you live in the UK and your gains are within your tax-free allowance, you do not need to report.
Ways to Reduce the Bill
These are legitimate planning points, not loopholes, and each depends on your circumstances. An accountant can tell you which apply before you agree a sale date.
Inherited Flats and Probate
If you inherit a flat, its value at the date of death, usually the figure agreed for inheritance tax, becomes your starting cost. You only pay capital gains tax on any rise in value after that. If the flat is sold soon after death, the gain is often small or nil.
Who pays depends on who sells. If the executors sell the flat during the administration of the estate, any gain is taxed in the estate. If the flat is passed to a beneficiary first and they sell it later, the gain is theirs. Executors selling during administration also have an allowance for the year of death and the two years after. Our guides to selling a probate flat and the mistakes to avoid cover the rest of the process.
What to Do, and What Not to Do
Do:
- Talk to an accountant before you agree a sale date. The date you exchange contracts fixes the tax year, so the timing can change the bill.
- Gather your paperwork early. Purchase completion statement, improvement invoices, lease extension costs and the sale figures.
- Put the tax aside on completion. Keep enough of the proceeds of sale back to pay the bill within 60 days.
Do not:
- Do not wait for your tax return. The 60-day deadline applies even if you file Self Assessment later.
- Do not claim repairs as improvements. Redecorating and like-for-like replacements are not deductible.
- Do not assume a former home is fully exempt. If you let it out after moving, part of the gain is usually taxable.
Our guide to the cost of selling a leasehold flat puts capital gains tax alongside the other costs of a sale, and our guide to selling a flat with a tenant covers the landlord's side of a sale.
Sources and Further Reading
- GOV.UK: Capital Gains Tax rates and allowances.
- GOV.UK: Tax when you sell property, including working out your gain and deductible costs.
- GOV.UK: Tax when you sell your home, for private residence relief, absences and letting relief.
- GOV.UK: Report and pay your Capital Gains Tax, for the 60-day rule.
- HMRC Capital Gains Manual CG15180, on enhancement expenditure such as improvements.
Frequently Asked Questions
Not if it has been your only or main home for the whole time you owned it, because private residence relief covers it. You usually do if it was a buy-to-let, a second home, an inherited flat or a former home you let out. In 2026/27 the rates are 18 percent within your unused basic rate band and 24 percent above, after a £3,000 annual allowance.
60 days from completion. If there is tax to pay on a UK residential property, you must report the sale through HMRC's online capital gains tax on UK property service and pay the tax within 60 days. Interest and penalties apply if you are late. If you file a Self Assessment return, you include the sale there too.
Yes. The premium you paid to extend the lease counts as an improvement to the flat, and so do the legal and valuation fees for the extension. Both are deducted from the gain when you sell, which can make a large difference on a flat with a short lease. Keep the completion statement and invoices.
The purchase price, the stamp duty and legal fees you paid when buying, the estate agent and legal fees when selling, the cost of improvements such as an extension or loft conversion and lease extension costs. You cannot deduct normal repairs and redecorating, mortgage interest, service charges or ground rent.
Possibly on part of the gain. Private residence relief covers the years it was your main home and always the final nine months before the sale. Some absences also count, such as up to three years away for any reason if you lived there before and after. The rest of the gain, for example the years it was let, is usually taxable.
Only on any rise in value after the date of death. The probate value, usually the figure agreed for inheritance tax, becomes your starting cost. If the flat is sold soon after death the gain is often small. Whether the estate or the beneficiary pays depends on who sells it.
If you live in the UK and your gains are within your £3,000 allowance, or the flat was your main home throughout, you usually do not need to report it. If you live abroad, you must report the sale of UK property within 60 days even if no tax is due.
Each of you is taxed on your own share of the gain and you each have a £3,000 allowance and your own basic rate band, so joint ownership often reduces the total. Transfers between spouses and civil partners are free of capital gains tax, so ownership can sometimes be rearranged before a sale. Take advice from an accountant before doing so.