This guide explains how Capital Gains Tax (CGT) should be considered when modelling an exit from a UK property deal in the 2026 tax year. It is designed for property investors and developers using Koreograph, not as personal tax advice.
Summary for 2026
CGT can apply when an individual sells a personally owned investment property for more than its allowable base cost. The taxable gain is usually sale proceeds minus allowable acquisition cost, qualifying capital improvement expenditure, buying and selling costs, available losses and any available annual exempt amount.
For individuals, the annual exempt amount is £3,000 for both 2025/26 and 2026/27. Current CGT rates for individuals are 18% and 24%, depending on the person’s taxable income position and how much of the basic rate band is available. Trustees and personal representatives may have different treatment.
Personal ownership vs company ownership
CGT is mainly a personal-tax concept. If a UK limited company owns and sells the property, the company will usually be dealing with corporation tax on chargeable gains rather than personal CGT. Extraction of profits from the company is a separate planning question and should not be confused with the property-level gain.
What counts in the gain
- Purchase cost. The acquisition price normally forms the starting base cost.
- Buying and selling costs. Legal fees, agent fees and other incidental costs can often reduce the taxable gain where they meet the rules.
- Capital improvements. Works that improve the asset, such as extensions or lasting upgrades, may be treated differently from repairs and maintenance.
- Private residence relief. This can matter for a former home, but is usually not available for a straightforward investment property.
- Losses. Capital losses may reduce taxable gains, subject to the reporting and offset rules.
Reporting and payment timing
UK residential property gains generally need to be reported and paid within 60 days of completion. Do not model CGT as a distant year-end admin item if sale proceeds are needed for the next deal.
How to apply this in Koreograph
Use the exit CGT assumptions to stress-test whether a sale actually leaves enough cash after tax, debt repayment and selling costs.
- For a flip, CGT can materially reduce the apparent profit margin, especially once selling costs and finance are included.
- For a long-term hold, CGT affects final equity and total wealth at the modelled exit date.
- Where refurb costs drive value uplift, distinguish capital improvement assumptions from ordinary repairs.
- When comparing personal ownership and limited-company ownership, model them as separate scenarios rather than blending the tax treatment.
- If the sale is tenanted or delayed, reflect lost rent, void costs and council tax separately from CGT.
Decision rule
A deal that looks attractive before tax should still clear the investor’s required return after exit tax. If the outcome only works by assuming a very low taxable gain, treat that as a diligence item and get advice before relying on it.