Do I pay capital gains tax when I sell my home?

Capital gains tax is a tax on the profit you make when you sell something that has gone up in value, not on the full sale price. When you sell a home, the gain is the difference between what you paid for it (plus certain buying and improvement costs) and what you sell it for.

What is Private Residence Relief?

Private Residence Relief is the relief that removes capital gains tax from the sale of your main home. It applies automatically when the property has been your only or main residence for the whole period you owned it, the house and grounds are under 5,000 square metres (about an acre), and you did not buy it mainly to sell on at a profit.

When do you actually pay capital gains tax on a property?

You may owe capital gains tax when the home was not your main residence for the entire time you owned it. The common situations are below.

• It was a second home or a holiday home.
• It was a buy-to-let, or was rented out for part of the time you owned it (having a single lodger does not count).
• Part of it was used only for business, such as a room used exclusively as an office or surgery.
• You inherited it and never lived in it as your main home.
• Its grounds are larger than 5,000 square metres.
• You bought or developed it mainly to sell on for a profit.

How much capital gains tax would you pay?

The rate depends on your income tax band in the year you sell. For residential property sold on or after 30 October 2024, basic-rate taxpayers pay 18% and higher-rate or additional-rate taxpayers pay 24%, charged only on the gain that is left after your costs, any reliefs, and the annual tax-free allowance.

Couples who own a property jointly each have their own £3,000 allowance, so a jointly owned second home has £6,000 of gain free of tax before any rate applies.

This is an illustration, not advice. Your own figure depends on your income, your allowable costs, and any reliefs that apply to you.

How and when do you report and pay it?

1. Work out your gain: sale price minus purchase price, minus allowable buying, selling, and improvement costs.
2. Deduct any Private Residence Relief for the years it was your main home, plus the final 9 months of ownership.
3. Deduct your £3,000 annual allowance for 2025/26.
4. Report the gain using HMRC's Capital Gains Tax on UK Property online service.
5. Pay the tax due within 60 days of completion to avoid interest and penalties.

Does selling my main home affect anything else?

Even when no tax is due, it pays to know your home's current value before you sell, so you can plan your move and your next deposit with real figures. ValuQ gives UK homeowners free, side-by-side property valuations from competing local estate agents, so you can see what your home is worth today and what you would walk away with. The decision to sell, and the timing, stays entirely yours.

Capital gains tax sounds frightening, but for most people selling the home they live in, the answer is simple: there is nothing to pay.