CGT bills are rising as landlords face bigger bills due to frozen thresholds
Andy Noton, 6 May 2026
Andy Noton, 6 May 2026
If you are thinking about selling a rental property, Capital Gains Tax (CGT) is likely to take a larger share than it did a few years ago.
Recent figures show that annual CGT receipts for 2025–26 are 62 per cent higher than in 2024–25, and many landlords are now feeling the impact.
HMRC reported £19.7 billion in CGT receipts for January and February 2026, up from £11.4 billion the year before.
Some of this increase is believed to be linked to people bringing forward sales ahead of expected tax changes.
However, there is also a more explicit reason, which is that the amount of gain you can make before paying tax has been reduced significantly.
The annual CGT exemption is now £3,000 and has been in effect since April 2024.
To put that into context, it was £12,300 as recently as the 2022 to 2023 tax year. It then dropped to £6,000 and has now been cut again to its current level.
This means far more of your gain is now taxable and a sale that may previously have fallen within the allowance could now result in a tax bill.
Income Tax thresholds have also been frozen and are due to remain so until April 2031.
As rental income increases, more landlords are moving into higher-rate tax bands.
Gains on residential property are taxed at:
A larger proportion of landlords are now paying tax at 24 per cent, simply because their overall income has increased over time.
With only £3,000 tax-free, most of the gain is now exposed to CGT. For landlords with long-held properties, where values have risen over time, the difference can be substantial.
Some have chosen to sell sooner rather than later. Others are holding off, either to spread disposals across tax years or to see if the tax position changes.
The drop in the annual allowance, combined with frozen tax thresholds, means higher bills are inevitable rather than the exception.
If you are considering a sale, you may want to consider the timing of a sale, whether the ownership structure is still suitable and how any gain will sit alongside your other income in the tax year.
Managing Capital Gains Tax on property sales requires careful planning, particularly as allowances shrink and tax thresholds remain frozen.
If you are considering selling a property, we can help you take a proactive approach to managing your tax position. Get in touch with our property expert Andy Noton (andrewnoton@lubbockfine.co.uk) to explore opportunities to manage your CGT exposure.
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