No capital gains tax increase has been announced for the 28 October Budget. The idea in circulation is a Labour donor’s plan to raise the personal allowance, paid for partly by aligning capital gains tax with income tax rates, which reporting puts at up to 45%, or 48% in Scotland. The Telegraph reports that the government is weighing his plan, but the Treasury has proposed nothing on capital gains tax.
Until anything is announced, selling a rental property means 18% within the basic rate band and 24% above it, after a £3,000 annual exempt amount, reported and paid within 60 days of completion.
Here is the position, sorted into the three boxes that matter: what is already law, what is announced with a date, and what is pure speculation.
Last checked against HMRC guidance, HMRC statistics and legislation on 30 September 2026.
In short
- Capital gains tax on a rental sale today is 18% within the basic rate band and 24% above it.
- A £3,000 annual exempt amount applies, and the gain must be reported and paid within 60 days of completion.
- Income tax on rental profits already rises to 22%, 42% and 47% from April 2027, enacted in the Finance Act 2026.
- The £2m council tax surcharge and the EPC C target are announced policy, not yet law.
- No capital gains tax rise has been announced for the 28 October Budget. A donor’s plan that would align it with income tax, to pay for a higher personal allowance, is reported to be under consideration.
- A rate rise can start on Budget day. In 2024 that happened for shares and other assets, not residential property, whose rate did not move that day.
In this guide: 5 sections
CGT rates on a sale today
For individuals, capital gains are taxed at 18% within the basic rate band and 24% above it, rates that have applied to residential property since 6 April 2024. Other assets moved to the same rates on 30 October 2024, when the Autumn 2024 Budget aligned the two, so property and other assets are now taxed the same way.
The annual exempt amount is £3,000. A UK residential property gain must be reported and the tax paid within 60 days of completion, which is much sooner than the January Self Assessment deadline. Your own home is generally exempt; investment property is not.
Those are the rules a sale completed today actually faces, and the old 28% residential rate is gone.
What you can deduct, and relief on a former home
The gain is the sale price less what the property cost you, and the law allows three kinds of cost:
- The purchase price with its buying costs.
- Money spent improving the property.
- The costs of selling.
Under section 38 of the Taxation of Chargeable Gains Act 1992, buying and selling costs mean professional fees such as a solicitor, surveyor or estate agent, advertising, and the costs of transfer, including stamp duty land tax.
An improvement counts only if it is still reflected in the property when you sell, such as an extension. Normal maintenance and decorating do not count, mortgage interest does not count, and nor does anything allowable as an expense against the rent.
Take a landlord who bought for £180,000, paid £6,000 in buying costs, spent £20,000 on improvements and sells for £280,000 with £4,500 of selling costs. The gain is £69,500.
| Worked example | Figure |
|---|---|
| Purchase price | £180,000 |
| Buying costs | £6,000 |
| Improvements | £20,000 |
| Sale price | £280,000 |
| Selling costs | £4,500 |
| Gain | £69,500 |
| Taxable after £3,000 exempt amount | £66,500 |
| Tax bill at 24% | £15,960 |
After the £3,000 annual exempt amount, £66,500 is taxable, and at 24% the bill is £15,960, reported and paid within 60 days of completion. Any part of the gain that fits within an unused basic rate band is taxed at 18% instead.
If you inherited the property, its value when the person died takes the place of the purchase price, as our guide to selling or renting an inherited house explains.
If the property was once your home, Private Residence Relief still covers the years you lived there plus the last 9 months you owned it, even if it was let during those months, and the rest of the gain is taxable.
HMRC’s own example is a £120,000 gain on a home owned for 15 years and lived in for 7.5: relief covers 8.25 years, or 55%, leaving £54,000 chargeable.
The final period is 36 months for a seller who is disabled or a long-term care home resident and has no other home. Letting relief now applies only where you lived in the property at the same time as your tenants, and it is capped at £40,000, so a former home later let out as a whole gets none.
Capital gains tax is a UK-wide tax, so these rules apply in the same way across the whole of the UK.
Property tax changes still to come
Two property tax changes have dates attached, and their legal status differs: one is already law, the other is announced but not legislated. A rise in income tax on individually held rental profits, through new property rates of 22%, 42% and 47%, two points above the current 20%, 40% and 45%, is already law in the Finance Act 2026, which received Royal Assent on 18 March 2026.
The new rates apply from the 2027 to 2028 tax year, which starts on 6 April 2027, so nobody pays them yet. They apply to individual landlords in England and Northern Ireland, not to companies.
A Scottish taxpayer’s rental profits are not charged at these rates, because the new charge is made subject to section 11A of the Income Tax Act 2007, so they are taxed at Scottish rates. From the 2027 to 2028 tax year the Scottish Parliament can also set separate Scottish property rates, a power brought into force on 16 September 2026, and any such rates would be its decision.
The high-value council tax surcharge on £2m-plus homes in England from April 2028 was set out at the same Autumn 2025 Budget but has not been legislated at all, so treat its design details as provisional until a statute exists. We cover who pays it in our guide to the £2m council tax surcharge.
| Change | Status | Effective |
|---|---|---|
| Rental income tax rates: 22%, 42%, 47% | Law, Finance Act 2026 | From 6 April 2027 |
| £2m+ council tax surcharge, England | Announced, not yet legislated | From April 2028 |
The EPC C requirement for rented homes by 2030 is not a tax, but it also has a date attached as confirmed policy awaiting legislation, and we track it separately in our EPC C guide.
What the Budget could do to capital gains tax
Where sellers are moving early, it is the third box that moves them: talk that the next Budget could raise capital gains tax rates or align them with income tax.
The Budget is set for 28 October 2026, confirmed by the Chancellor on 31 July. As of 30 September 2026 there was still no consultation and no formal announcement on a capital gains tax rise.
The proposal behind the current headlines comes from Dale Vince, the Ecotricity founder and Labour donor. In a pre-Budget proposal he called for raising the income tax personal allowance from £12,570, funded by the Bank of England ending the interest it pays banks on their reserves and, in part, by aligning capital gains tax with income tax rates.
According to the Telegraph, as reported by interactive investor, the government is weighing his ideas. That was the whole of the evidence as of 25 September: a donor’s proposal and a newspaper report, not a Treasury document. Since then, City AM reported on 27 September 2026 that Chancellor John Healey told the Sunday Times the UK has the “lowest capital gains tax (CGT) of any European G7 nation”, while saying he did not want to give “any answers or signals that will fuel Budget speculation”. City AM also noted that Wes Streeting, now Defence Secretary, and Louise Haigh, now First Secretary of State, have both argued that higher capital gains tax rates would make the overall system fairer and add to revenue, and other reporting says they made those arguments before taking their current roles. None of this is a Treasury proposal. The Chancellor announced no change and said he did not want to fuel Budget speculation, although City AM read his remark about the UK’s low capital gains tax as raising the prospect of a rise.
Full alignment would tax gains at income tax rates. The same report says Vince would phase it in over five years and puts the eventual top rate at 45% across most of the UK and 48% in Scotland, where the top income tax rate is higher.
| The £66,500 taxable gain from our example | Tax |
|---|---|
| At today’s 24% | £15,960 |
| At 40%, if aligned with the higher rate | £26,600 |
| At 45%, if aligned with the additional rate | £29,925 |
| At 48%, if aligned with Scotland’s top rate | £31,920 |
Those higher lines are an illustration of the proposal’s direction, not a costing of any announced measure, and a real design could add bands, reliefs or transitional rules that change the figures.
What happened after the last round of speculation
HMRC’s capital gains tax statistics show that capital gains tax liabilities reached a record £24.2 billion in the 2024 to 2025 tax year, up 89%, and HMRC attributes part of that rise to taxpayers bringing disposals forward ahead of the Autumn 2024 Budget.
Residential property has since cooled, though the 2025 to 2026 figures are provisional. So far in that tax year, 156,000 taxpayers have filed a return through the capital gains tax on UK property service, reporting £8.9 billion of gains and £1.9 billion of tax, all lower than the year before. HMRC expects late filings and amendments to add to those totals.
Why exchanging early may not lock in today’s rate
A rate change can take effect on Budget day itself. The Autumn 2024 rise from 10% and 20% to 18% and 24% applied to disposals made on or after 30 October 2024, the day of that Budget, under section 7 of the Finance Act 2025. That rise covered shares and other assets, not residential property, which was already at 18% and 24% from 6 April 2024.
For capital gains tax a sale normally happens when the contract is made, which for property is exchange, not completion, under section 28 of the Taxation of Chargeable Gains Act 1992.
For the assets whose rate did rise in 2024, that rule was switched off for contracts exchanged before Budget day and completed after it. Schedule 2 to the Finance Act 2025 treated those sales as happening at completion, unless getting a tax advantage from the exchange date was no purpose of the contract and, between connected people, it was wholly commercial. A landlord’s exchange date was not affected, because the property rate did not change that day.
No such rule applies to property sales today, but a Budget that raised the property rate could write one. So a rushed exchange is no guarantee of today’s rate, and nobody can yet say how a property rise would be timed.
It might happen. In 2024 the speculation proved right for shares and other assets but not for property, so a decision made purely to beat a rise is a bet on something nobody outside the Treasury knows.
The same discipline applies in reverse: nothing rules a rise out, and a seller already planning to exit within a year has a genuine timing question rather than a panic.
Selling property before the next Budget
A dated Budget gives some vendors a reason to time a sale. Foundation’s Q1 2026 landlord research, a lender-promoted release based on Pegasus Insight’s Landlord Trends survey of National Residential Landlords Association members rather than a representative sample of all UK landlords, found 42% of landlords expecting to sell at least one property within a year, while 63% intended to stay in the sector.
Foundation said the selling figure could reflect cost and compliance pressure, and did not link it to the Budget.
No published data yet measures how many sales are being timed around it. Where either side is working to a date, it is better said at the start, so both can agree terms that fit it.
The structural side of buying from them, including when to buy the company rather than the buildings, is covered in our share sale versus asset sale guide.
Sellers
If you were exiting anyway, a sale that exchanges and completes under known rules at 18% and 24% has real value, and the 60-day reporting clock starts at completion. If you are still deciding whether to sell at all, our sums on selling or keeping a buy to let work through both options.
If you had no plan to sell, a possible Budget change is not on its own a reason to start, and if you are working to a deadline, say so early and agree terms that reflect it.
Buyers
If a vendor has a date in mind, a buyer who can move quickly and complete with certainty is offering something of real value, alongside the price.
What this means for property investors
Underwrite on the law in force: 18% and 24%, £3,000 exemption, 60-day reporting.
Note the April 2027 rise in income tax on rental profits in your holding-structure maths now, because it is already enacted in the Finance Act 2026 rather than merely proposed. It may change the company versus personal ownership comparison our Section 24 guide sets out, so take tax advice on your own structure.
Watch Budget talk on capital gains tax, but do not plan on it. Plan on the rates in force.
If you are already selling, the date that sets the rate is normally exchange, but a Budget that raised the property rate could also write a rule reaching contracts exchanged before it and completed after, as the 2024 rules did for other assets.
This is general information, not advice on your position, so take independent advice before acting.
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