What is the basic-rate band?
The basic-rate band is the slice of taxable income taxed at the basic rate: £37,700 above the personal allowance for 2026 to 2027. Capital gains that fit within any unused part of the band are taxed at 18%, and gains above it at 24%.
Read more in our guide: Landlord Exit Calculator
Key facts at a glance
| Item | 2026 to 2027 (England, Wales and Northern Ireland) |
|---|---|
| Personal allowance | £12,570 (reduced by £1 for every £2 of income over £100,000) |
| Basic-rate band | £37,700 of taxable income above the personal allowance |
| Higher-rate threshold | £50,270 of total income |
| Additional-rate threshold | £125,140 |
| CGT on residential gains inside the band | 18% |
| CGT on residential gains above the band | 24% |
| Thresholds frozen until | April 2031 (Autumn Budget 2025) |
Why the Basic-Rate Band Matters for Capital Gains
For income tax, the basic-rate band is the £37,700 slice of taxable income charged at the basic rate. For Capital Gains Tax, it decides the rate on your gains. HMRC works out your taxable income first, then adds your taxable gains on top. Any gain that fits within the part of the band your income has not used is taxed at 18%; anything above it is taxed at 24%.
So the same £50,000 gain can cost very different amounts depending on the seller's income that year. A retired landlord with a small pension may have most of the band free; a landlord with a salary or substantial rents may have none.
A Worked Example
Two landlords each make a taxable gain of £40,000 (after the £3,000 allowance) in 2026 to 2027.
| Landlord A | Landlord B | |
|---|---|---|
| Total income | £20,000 | £60,000 |
| Unused basic-rate band | £30,270 | £0 |
| Gain taxed at 18% | £30,270 = £5,449 | £0 |
| Gain taxed at 24% | £9,730 = £2,335 | £40,000 = £9,600 |
| Total CGT | £7,784 | £9,600 |
Figures are illustrative and ignore other reliefs. Landlord A's figure assumes income is all non-savings income and the full personal allowance is available.
Planning Points When Selling Rental Property
- Timing a sale for a low-income year. Some landlords sell in the tax year after they retire or stop work, when more of the band is free. Rental income still uses up the band, so a year in which several properties have already been sold can leave more room for the gains on the rest.
- Spreading sales. A phased sale over two or more tax years gives a fresh band each year, alongside a fresh annual exempt amount.
- Joint owners. Each owner has their own band, which is one reason property held jointly with a lower-earning spouse can produce a smaller total bill.
- Pension contributions and Gift Aid. Personal pension contributions made under relief at source and Gift Aid donations extend your basic-rate band, which can bring more of a gain into the 18% rate. Speak to an adviser before relying on this.
- Estimating in-year. The 60-day report is often filed before you know your income for the year, so it uses an estimate. The final position is settled on your Self Assessment return.
Frozen Thresholds and Rising Tax on Rents
The personal allowance and higher-rate threshold have been frozen since April 2021, and the Autumn Budget 2025 extended the freeze to April 2031. As rents rise, more landlords are pushed into the higher rate, leaving less of the band available for gains. The same Budget announced separate income tax rates for property income from April 2027 of 22%, 42% and 47%, with mortgage interest relieved at 22%. Those changes affect the return from keeping a portfolio rather than the CGT on selling it, but many landlords now consider the two together.
Scottish taxpayers pay Scottish income tax rates on earnings and rents, but CGT is worked out using the UK bands above.
Official Sources and Further Reading
- GOV.UK: Income Tax rates and Personal Allowances
- GOV.UK: Capital Gains Tax rates and allowances
- GOV.UK: Budget 2025
General information for landlords in England, checked against official sources in October 2026. It is not tax, legal or financial advice: speak to a qualified accountant or solicitor about your own circumstances.
Frequently Asked Questions
The basic-rate band is the slice of taxable income taxed at the basic rate: £37,700 above the personal allowance for 2026 to 2027. Capital gains that fit within any unused part of the band are taxed at 18%, and gains above it at 24%.
The basic-rate band is £37,700 of taxable income above the £12,570 personal allowance, so the higher rate starts at £50,270 of total income for most people.
Your taxable gains are added on top of your taxable income. Gains within any unused part of the basic-rate band are taxed at 18% for residential property, and gains above it at 24%.
Yes. The personal allowance and higher-rate threshold are frozen until April 2031 following the Autumn Budget 2025.
No. Capital Gains Tax uses the UK income tax bands, even for Scottish taxpayers who pay Scottish rates on their income.
Thinking About Selling Your Portfolio?
Ask for a no-obligation portfolio appraisal, or call us to talk through your options in confidence.