The Telegraph has run an article under the headline ‘How to sell your buy-to-let and pay less tax’

Selling a buy-to-let property can be an expensive transaction if not handled strategically, particularly due to Capital Gains Tax (CGT). To help you maximize your return and legally reduce your liability, here are the key tax rules for the 2025-26 tax year and five actionable ways to lower your CGT bill.

2025-26 Buy-to-Let CGT Snapshot

• Annual Exempt Amount (AEA): The tax-free allowance for individuals is £3,000 for the 2025-26 tax year. You only pay CGT on gains above this threshold.
• 60-Day Deadline: You must report and pay any CGT due on a UK residential property sale within 60 days of the completion date. This filing is required in addition to your annual self-assessment tax return.

Five Ways to Legally Lower Your Buy-to-Let Tax Bill

1. Remember to Use All Available Reliefs

You can significantly reduce your taxable gain by offsetting allowable costs. When calculating your gain, be sure to deduct expenses such as:

• Estate agent and solicitor fees.
• Stamp duty paid when purchasing the property.
• Surveyor’s costs.
• Funds spent on home improvements.

2. Move Into the Property (Private Residence Relief)

If your rental property was, at any stage, genuinely your main residence, you may qualify for Private Residence Relief (PRR).

• Any period the property was occupied by you as your main home will be exempt from CGT.
• Crucially, the final nine months before the sale will also be exempt from CGT, regardless of whether you lived there during that time.
• Note: You must be able to prove genuine occupation as your main home, as the tax authority may challenge inappropriate claims.

3. Make Use of Your Partner’s Tax Allowance

If you are married or in a civil partnership, you can utilize gifting rules to combine both partners’ tax-free allowances.

• You can transfer a share of the property to your spouse or civil partner before the exchange of contracts without incurring stamp duty (unless a loan is attached).
• This transfer allows the couple to use both of their individual £3,000 tax-free CGT allowances, potentially sheltering up to £6,000 of the total gain from tax.

4. Use a Company Structure (Corporation Tax)

Holding rental properties within a limited company offers several tax benefits over holding them in your personal name.

• Tax Rate: When a company sells a property, the profit is subject to Corporation Tax (which is 19% if profits are under £50,000, rising to 25% if over), rather than individual CGT rates of up to 24%.
• Mortgage Interest: Companies can offset all mortgage interest payments against tax bills, a perk no longer available to individual landlords.
• Note: HMRC may challenge the company structure if it appears the change was made solely to reduce tax liability.

5. Use a More Tax-Efficient Way of Investing

If managing buy-to-let properties is no longer appealing, consider re-investing the sale profits into a Real Estate Investment Trust (REIT).

• REITs specialize in investing in property, often commercial, providing access to the market without the hassle of managing tenants.
• Shares in investment trusts can be held within an Individual Savings Account (ISA), meaning any returns you make are free of tax.