What creates a taxable gain?
CGT may arise when an individual sells, gives away or otherwise disposes of UK land or residential property that is not fully covered by Private Residence Relief or another relevant exemption. A gain is not the full sale price: broadly, acquisition cost, qualifying acquisition and disposal costs, certain capital improvements, losses and available reliefs affect the calculation.
For 2026/27 the annual exempt amount for individuals is £3,000. The main CGT rates are 18% and 24%, depending on the individual's taxable-income position and the relevant gain. An individual may have other gains and losses that affect the final position.
Gifting a buy-to-let to an adult child: the market-value rule
A gift to a child or other connected person can be treated as a disposal at market value for CGT, even where the child pays nothing. The parent may therefore face a tax bill without receiving cash with which to pay it. An existing mortgage introduces additional questions about lender consent and possible SDLT if debt is assumed.
The recipient's eventual CGT base cost ordinarily reflects the relevant acquisition market value, subject to special rules. A property that a child never occupies as their own main residence does not automatically gain PPR because it was the parent's home.
Between spouses or civil partners
Transfers between spouses or civil partners living together normally take place on a no-gain/no-loss basis for CGT, so gains can effectively be deferred until a later disposal. The position can differ on separation, divorce and in cross-border circumstances; the rules must be checked before relying on the treatment.
A CGT-neutral spouse transfer is not necessarily SDLT-neutral where consideration includes a share of mortgage debt. A genuine ownership change can also affect the eventual CGT allocation between the parties.
Sixty-day UK property reporting and overseas residents
UK-resident individuals who dispose of a UK residential property and have CGT payable generally must report and pay the tax within 60 days of completion. They should not wait until their next Self Assessment return.
Non-UK-resident individuals are generally required to report disposals of UK property or land within the applicable deadline even where no CGT is ultimately payable. Non-resident calculations can involve different rebasing and valuation rules, particularly for historic ownership.
Sale versus gift versus inheritance
A lifetime gift can bring CGT forward, whereas death itself does not generally trigger CGT on a deceased individual's assets, with the property ordinarily receiving a date-of-death valuation for the estate or beneficiaries. IHT may instead be relevant on death.
The CGT and IHT answers must be considered together. The least expensive route for one tax is not necessarily the best overall plan, especially where parents intend to retain occupation or a rental income.