HMRC claim £16 billion capital gains tax take from landlords

HMRC has claimed a record £16.9 billion in Capital gains tax (CGT) revenue this January – a £7 billion increase compared to the same month last year, according to The Office for National Statistics (ONS).

Some experts are suggesting that the tax windfall is a result of a mass exodus of landlords from the rental market. More landlords selling up could be driven by a combination of a lower tax-free CGT allowance, higher CGT rates 4, and the looming implementation of the Renters’ Rights Act.

HMRC’s record CGT revenue: key takeaways

basic rate taxpayers pay 18 per cent CGT on property profits, while higher rate taxpayers pay 24 per cent
HMRC collected £16.9 billion in CGT in January 2026 – 69 per cent more than the previous year
you must report and pay CGT within 60 days of completing a property sale to avoid penalties
the tax-free allowance is now just £3,000, down from £12,300 in recent years
the number of penalties for failing to notify HMRC has doubled, with 1,665 fines issued in 2024-25

Why are landlords selling now?

A spike in CGT revenue could point towards a high number of landlords leaving the private rental sector. For example, our 2025 Landlord Report found that 36 per cent of landlords were planning to sell within the next 12 months.

There are several factors that could be driving landlords to sell:

regulatory pressure – the Renters’ Rights Act is set to bring about the biggest changes to renting in a generation. Many landlords fear increased regulation will make renting out their property harder work and less profitable
rising tax burden – with the CGT allowance slashed to £3,000 and an additional two per cent income tax charge coming in April 2027, there’s more of a financial squeeze than ever
minimum energy efficiency targets – with rental properties needing to reach a minimum EPC rating of C by 2030, many landlords believe the upgrades will be too costly. More than one in 10 landlords think they’ll need to spend more than £10,000 to meet the new requirements
Making Tax Digital – From April 2026, some landlords will need to start filing their tax return every quarter – using government approved accounting software. Back in September 2025, 68 per cent of landlords didn’t feel prepared for MTD – and some landlords could be put off by a potentially more costly and time-consuming process

How to avoid capital gains tax penalties

As the government rakes in record capital gains tax revenue, HMRC is also cracking down on non-compliance. Recent figures show penalties for failing to notify HMRC about CGT liabilities have doubled.

To stay compliant when selling a rental property, landlords must follow these strict rules:

the 60-day rule – you must report and pay any CGT due within 60 days of the completion of the property sale
know your rates – property CGT rates are currently 18 per cent for basic-rate taxpayers and 24 per cent for higher or additional-rate taxpayers
avoid the failure to notify trap – failing to report the sale within 60 days can result in an immediate £100 fine, with further penalties of five per cent of the tax due or £300 (whichever is greater) if the delay reaches six months
deduct allowable expenses: to lower your bill, make sure you only deduct acquisition costs (stamp duty, legal fees), improvement costs (extensions or structural work, but not general maintenance), and disposal costs (estate agent and solicitor fees)

Are landlords leaving the market ahead of the Renters’ Rights Act?

Back in the summer of 2024, there was widespread concern that the new government would align capital gains tax rates with income tax (potentially hitting 45 per cent). As a result, it’s likely that some landlords rushed to sell before the 2024 Autumn Budget.

Even though the rate only rose to 24 per cent, some landlords may already have sold their properties. The record tax revenue we see now could partly be those landlords finally settling their bills by the 31 January deadline.

Meanwhile, the record revenue may not necessarily be due to more landlords selling but because the government is taking a bigger cut. The tax-free capital gains tax allowance was slashed from £12,300 in 2022 to just £3,000 today. This means smaller scale landlords who previously wouldn’t have owed anything, now pay tax when they sell a property.

And for higher-rate taxpayers, the rate is now 24 per cent – which generates a significant amount of tax revenue.

Jason Hollands, managing director at wealth management firm Evelyn Partners, said: “Don’t forget that many thought CGT rates were going up more than they did, with some Labour MPs arguing for an equalisation with income tax rates, so a summer [2024] firesale of assets could be behind this spike.”

“We will only know next year if this was a one-off boost from pre-October 2024 disposals, or whether investors continued afterwards to sell assets at the higher CGT rates, which took effect immediately.”

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