Capital Gains Tax (CGT)
Capital gains tax (CGT) is a UK tax on the profit a person makes when they sell or dispose of an asset that has gone up in value. For renting, it mainly affects landlords, not tenants. If a landlord sells a rental property for more than it cost, after certain allowable costs, the gain may be subject to CGT.
The gain is broadly, sale price minus purchase price minus buying/selling costs (such as legal fees and stamp duty) and qualifying capital improvements (for example, an extension, not routine repairs). Each individual has an annual CGT allowance; gains above that are taxed at rates that currently differ from income tax and vary depending on whether the asset is residential property and whether the person is a basic or higher-rate taxpayer.
Tenants do not pay CGT on the property they rent, and capital gains tax should not appear as a charge or “admin fee” in a tenancy. A landlord’s CGT bill is their own tax obligation, even where renter-focused reforms (such as the Renters’ Rights agenda) increase standards or compliance costs.
For renters, CGT mainly matters indirectly: it may influence a landlord’s decision to hold, improve or sell a property, but it does not reduce your day-to-day housing rights or protections.
