Capital Gains Tax main rates unchanged in Budget as rental tax rises

The Budget presented to Parliament on Wednesday 28 October 2026 contains no change to the main rates of Capital Gains Tax. That is the position in the Budget 2026 document published by HM Treasury, where CGT means the tax on the profit when you sell an asset. But the same document raises income tax on property income by a further two percentage points from 6 April 2027. So the tax on selling stays put, while the tax on holding goes up.

What did the Budget announce on Capital Gains Tax?

Chapter 7 of the Budget 2026 document says it "sets out all Budget 2026 policy decisions". Its CGT measures in that chapter are a new Founders' Relief, a change to exit charges for trusts and a lower lifetime limit for one relief. That relief is Business Asset Disposal Relief (BADR, a reduced rate on qualifying business disposals). None of them changes the main CGT rates.

The detail matters for dates. Founders' Relief offers a 10% CGT rate on up to £10 million of lifetime gains for qualifying founders of high-growth, innovative companies, from 6 April 2027 (Budget 2026 document). The BADR lifetime limit falls from £1 million to £500,000 for disposals made from 6 April 2027, according to the same document. Both will be legislated in Finance Bill 2026-27.

This settles a week of reports. On 21 October, PropertyWire reported, citing other reports, that Chancellor John Healey would not raise CGT rates in the Budget. On 20 October, Mortgage Solutions said the move was first reported by The Times. The published Budget now confirms no main-rate change.

How much would a CGT rise have cost landlords?

The Letting Partnership modelled the scenario that did not happen, as reported by PropertyWire on 21 October. It found the average home value in Britain rose from £198,169 in July 2016 to £272,611 by July 2026. That is a gain of £74,442 over the decade.

On that gain, a landlord paying higher or additional rate income tax would face a CGT liability of £17,866. That figure uses the current 24% rate and excludes any CGT allowances, according to the analysis. Had CGT been aligned with income tax rates, a higher-rate taxpayer's liability could have increased to £29,777 at 40%, an extra £11,911.

For additional-rate taxpayers, a move to 45% could have taken the bill to £33,499, an increase of £15,633, or 87.5% (The Letting Partnership, via PropertyWire). Basic-rate taxpayers would have seen the same gain's liability rise from £13,400 at 18% to £14,888 at 20%. If you are weighing a sale against a purchase, our free stamp duty calculator covers the buying side of the same decision.

Chris Mason, Chief Operating Officer at The Letting Partnership, said the decision was "a welcome step in the right direction". In comments reported by PropertyWire, he added that landlords "need more than the avoidance of further tax increases".

What changes for rental income, and when does it take effect?

Here is the change with a firm date. The Budget 2026 document increases all the rates of income tax applied to property income by 2 percentage points (a percentage point is one unit on the rate itself). From 2027 to 2028, the property basic rate will be 24%, the property higher rate 44% and the property additional rate 49%.

The jurisdiction is specific. The document states these rates will apply across England, Wales and Northern Ireland. They will be legislated for in Finance Bill 2026-27 and take effect from 6 April 2027. The document does not set out the position for Scotland in that passage.

This comes on top of an earlier rise. The Budget document says Budget 2025 had already increased the rates of tax on savings and property income by two percentage points from April 2027. As recently as 21 October, The Letting Partnership said via PropertyWire that landlords were preparing for that two-point rise. In practice, the increase from 6 April 2027 is now four percentage points in total.

The government says 84% of income tax payers will be unaffected by the savings and property changes in 2027-28. Table 6.1 of the Budget document puts the yield from the property income measure at £575 million in 2028-29. A higher tax rate on rental profit changes what a deal needs to earn, so you may wish to recheck your rental cover with our free buy-to-let stress test calculator.

In the Budget 2026 speech, the Chancellor said there would be no change to tax on income from dividends or from employment.

What should landlords who are thinking of selling check now?

Start with the reporting deadline, which is unchanged. The rules are set out in HMRC's policy paper on UK property disposal returns. Individuals, trustees and personal representatives with a chargeable gain on UK residential property must report the sale and make a CGT payment on account. The deadline is 60 days from completion.

The Budget softens one penalty. Some sellers miss that return and report the sale on their Self Assessment tax return (the annual return to HMRC) instead. For them, late filing penalties stop accruing once that return is submitted. This applies where the Self Assessment return is delivered from 28 October 2026, through amendments to Finance Act 2019 and Finance Act 2009. The policy paper is clear that the requirement to file the property disposal return remains.

Unchanged rates do not mean an easy exit. Gaurav Ladhar, managing director of Landmark Specialist Finance, said in comments reported by Mortgage Solutions that "the current level of capital gains tax can make selling difficult". He said landlords holding property in their personal names may be discouraged from selling as a result.

Some landlords may look at incorporation (moving properties into a limited company) instead, Ladhar said. He noted the Ramsay ruling is relevant to whether a letting activity qualifies as a business for incorporation relief. He cautioned that "it is not an automatic solution", and that landlords need specialist advice. Our business and systems guides cover how investors think about structure.

The wider pressure has not gone away. The National Residential Landlords Association has called for CGT to be overhauled to stimulate investment, according to Mortgage Solutions. If you are weighing whether to hold or sell, our property investment strategies hub sets out the main routes, and your accountant can run the numbers on your own position.

Key takeaways

• The Budget 2026 document, presented on 28 October 2026, contains no change to the main rates of Capital Gains Tax.

• Income tax on property income rises to 24%, 44% and 49% from 6 April 2027 in England, Wales and Northern Ireland.

• Together with the Budget 2025 rise, rental income faces a four percentage point increase from 6 April 2027.

• The 60-day deadline to report a UK residential property sale and pay CGT on account still applies.

• Consider modelling your rental profit at the new rates and speaking to your accountant before deciding to sell or restructure.