UK Capital Gains Tax (CGT) Calculator for Second Homes
Calculating tax on a second property in the UK can be complex due to varying rates (18% and 24%) and relief rules. This professional tool helps you estimate your potential tax liability by accounting for acquisition costs, allowable expenses, and Private Residence Relief (PRR). Whether you are selling a buy-to-let or a holiday home, use this calculator to plan your finances effectively before the disposal.
Calculation Summary
Understanding Capital Gains Tax on UK Residential Property
Selling a second home or a buy-to-let property in the United Kingdom triggers a specific tax event known as Capital Gains Tax (CGT). Unlike selling your primary residence—which is usually exempt thanks to Private Residence Relief (PRR)—disposals of additional properties are subject to taxation on the profit made during the period of ownership.
How CGT is Calculated
The fundamental formula for CGT is: Sale Price - (Purchase Price + Allowable Costs) = Gross Gain. However, the UK tax system allows for several deductions before arriving at the "Taxable Gain." These include legal fees for both buying and selling, Stamp Duty Land Tax (SDLT) paid upon purchase, and capital improvements (like an extension or new roof) that add value to the property.
Tax Rates for 2024/2025 and Beyond
For residential property, the rates are higher than for other assets like stocks. As of the most recent budget updates, Basic rate taxpayers pay 18% on their taxable gains, while Higher and Additional rate taxpayers pay 24%. It is important to note that the gain itself can push a basic rate taxpayer into the higher bracket.
The Importance of Private Residence Relief (PRR)
If you lived in the property as your main home for part of the ownership period, you are entitled to PRR. For example, if you owned a house for 10 years and lived in it for 5, roughly 50% of the gain would be exempt. Additionally, the last 9 months of ownership are often treated as tax-free, even if you weren't living there, provided it was your main home at some point.
Reporting and Deadlines
The "60-day rule" is critical. Since April 2020, UK residents must report and pay CGT on residential property disposals within 60 days of completion. Failure to do so results in immediate penalties and interest charges from HMRC.