If you are a landlord thinking about selling a buy-to-let flat or house in Scotland, one of the first questions is how much of the profit you will keep. Capital Gains Tax can take a meaningful share of the gain, and the reporting deadline is much shorter than many people expect.
The short answer is yes, you will usually need to pay Capital Gains Tax when you sell a buy-to-let in Scotland at a profit. Capital Gains Tax is a UK tax collected by HMRC, so the same rules apply in Scotland as elsewhere in the UK. For the 2026 to 2027 tax year, gains on residential property are taxed at 18% or 24% after a £3,000 tax free allowance, and you must normally report and pay within 60 days of completion. This guide explains how the tax works, what you can deduct and which reliefs might apply.
Key points at a glance
- It is a UK tax: Capital Gains Tax is not devolved, and the rate you pay is based on UK income tax bands even if you pay Scottish income tax.
- Rates for 2026 to 2027: 18% on gains within your unused basic rate band and 24% above it, after the £3,000 annual exempt amount.
- 60 day deadline: report and pay any tax due on UK residential property within 60 days of completing the sale.
- Costs reduce your gain: buying and selling costs and capital improvements can be deducted, but repairs and mortgage interest cannot.
- Former homes get relief: if you once lived in the property, Private Residence Relief can cover part of the gain, including the final 9 months of ownership.
- Get advice: every situation is different, so speak to an accountant or tax adviser before you agree a sale.
Does Capital Gains Tax apply to buy-to-let property in Scotland?
Yes. Capital Gains Tax applies when you sell, or otherwise dispose of, property that is not your home and it has increased in value. GOV.UK lists buy-to-let properties, business premises, land and inherited property as typical examples. You are taxed on the gain, not on the full sale price.
Although Scotland sets its own income tax rates and bands, Capital Gains Tax has not been devolved. It is charged and collected by HMRC across the whole UK, and the rate you pay depends on the UK income tax bands rather than the Scottish ones. This catches out many Scottish landlords, who assume their Scottish tax band applies to the gain.
Capital Gains Tax is also separate from the Land and Buildings Transaction Tax (LBTT) you paid when you bought, and from the income tax you pay on rent. If you own other properties as well as your home, our guide on paying tax when you sell a second home covers the overlap, and our explainer on when Capital Gains Tax applies to your own home explains why most main homes are exempt.
What are the Capital Gains Tax rates for 2026 to 2027?
According to the GOV.UK guide to Capital Gains Tax rates, gains made from 6 April 2026 are taxed at 18% and 24%. The rate depends on your taxable income and the size of the gain.
| Your position | Rate on gains in 2026 to 2027 |
|---|---|
| Gain falls within your unused basic rate band (taxable income plus gain up to £37,700) | 18% |
| Any part of the gain above the basic rate band | 24% |
| Higher or additional rate taxpayer | 24% on the whole taxable gain |
| Annual exempt amount (tax free allowance) per person | £3,000 |
| Trustees and personal representatives selling estate property | 24% |
To find your rate, take your taxable income (income after your Personal Allowance and reliefs), add your taxable gain after the £3,000 allowance, and see how much falls within the £37,700 basic rate band. The portion inside the band is taxed at 18% and the rest at 24%. Scottish taxpayers use this UK band for Capital Gains Tax, not the Scottish starter, basic and intermediate bands.
How do I work out the gain on a rental property?
Your gain is usually the difference between what you paid for the property and what you sold it for, less the costs HMRC allows you to deduct. If you received the property as a gift or inheritance, you normally start from its market value at that time instead of a purchase price.
- Start with the sale price agreed in the missives.
- Deduct the purchase price (or the market value when you inherited or were gifted the property).
- Deduct allowable buying and selling costs, such as solicitors’ and estate agents’ fees.
- Deduct capital improvement costs, such as an extension, that are still reflected in the property.
- Deduct any allowable losses from the same tax year or carried forward from earlier years.
- Deduct your £3,000 annual exempt amount if you have not used it on other gains.
What costs can I deduct?
| Cost | Deductible from the gain? |
|---|---|
| Solicitor’s fees, survey and LBTT (including any Additional Dwelling Supplement) when you bought | Usually yes, as costs of buying |
| Estate agent’s fees, solicitor’s fees and marketing costs when you sell | Usually yes, as costs of selling |
| Extensions, loft conversions and other genuine improvements | Yes, if the improvement is still reflected in the property |
| Repairs, redecoration and like for like replacements | No, although they may be allowable against rental income |
| Mortgage interest, letting agent fees and insurance | No, these relate to your rental income, not the gain |
Keep receipts and completion statements for every cost you plan to claim. HMRC can ask to see evidence, and it is much easier to gather paperwork before you sell than years later. Our guides on who pays the legal fees when selling and the fees involved in selling a house in Scotland set out the selling costs you are likely to have.
A worked example for 2026 to 2027
The figures below are purely illustrative. Imagine a landlord who bought a Glasgow flat for £110,000, paid £2,500 in buying costs and later spent £6,000 on capital improvements. They sell for £185,000 and pay £3,500 in selling costs. Their gain is £185,000 minus £110,000, £2,500, £6,000 and £3,500, which is £63,000. After the £3,000 annual exempt amount, £60,000 is taxable.
- If their taxable income is £30,000: £7,700 of the gain fits inside the £37,700 basic rate band and is taxed at 18% (£1,386). The remaining £52,300 is taxed at 24% (£12,552), giving a bill of £13,938.
- If they are a higher rate taxpayer: the whole £60,000 is taxed at 24%, giving a bill of £14,400.
HMRC has an online calculator for gains on property, but it cannot be used in every situation, for example if you claim reliefs other than Private Residence Relief or Letting Relief. An accountant can check your figures and make sure nothing is missed.
Can Private Residence Relief reduce the tax if I used to live there?
Yes, if the buy-to-let was once your only or main home. Private Residence Relief covers the gain for the years you lived in the property, and GOV.UK confirms that you also get relief for the last 9 months you owned it, even if you were not living there at the time. Only the remaining part of the gain is chargeable.
For example, if you owned a flat for 10 years, lived in it for the first 4 and let it out for the last 6, relief would cover 4 years plus the final 9 months: 4.75 out of 10 years, or 47.5% of the gain. On an £80,000 gain, £38,000 would be covered by relief and £42,000 would be chargeable before your annual exempt amount.
Some periods of absence can also qualify, for example up to 4 years where you had to live elsewhere in the UK for work, provided you lived in the home before and afterwards. These rules are detailed, so ask your adviser to check them against your own dates.
What happened to Letting Relief?
Letting Relief used to reduce the tax for many landlords who had once lived in their buy-to-let. Since 6 April 2020 it has been restricted, and GOV.UK now says it is only available if you lived in the home at the same time as your tenants, for example if you let a room. Where it applies, it is limited to the lowest of the Private Residence Relief you receive, £40,000, or the gain made from the let part of your home. Most landlords who let out a whole property they no longer live in will not qualify.
Good to know: for tax purposes, the date of disposal is generally when the contract is made rather than the date of entry. In Scotland that usually means the date missives are concluded, which decides the tax year your gain falls into. If you are selling close to 5 April, ask your adviser how the timing affects your rate and allowance.
When do I have to report and pay the tax?
GOV.UK says you must report and pay any Capital Gains Tax due on UK residential property within 60 days of completing the sale. In a Scottish sale, completion is the date of entry, when the price is paid and the keys are handed over. If you miss the deadline, you may have to pay interest and a penalty.
You report through HMRC’s Capital Gains Tax on UK property service. If you are already registered for Self Assessment, you must also include the sale on your tax return for that year, where the payment you made within 60 days is taken into account. UK residents whose total gains are within the tax free allowance do not need to report online.
| Stage | What it means for Capital Gains Tax |
|---|---|
| Missives concluded | Usually treated as the date of disposal, which fixes the tax year and the rates that apply |
| Date of entry (completion) | The 60 day reporting and payment period starts |
| Within 60 days of completion | Submit a UK property return and pay the estimated tax |
| 31 January after the end of the tax year | Self Assessment deadline, if you are registered, where the final figure is confirmed |
Your solicitor will send you a completion statement showing the sale price and selling costs, and our guide on how soon you get paid after a sale in Scotland explains when the money reaches you. It is sensible to set aside enough from the proceeds to cover the tax before you spend or reinvest the rest.
How does joint ownership affect Capital Gains Tax?
If you own the property with someone else, each owner works out and reports the gain on their own share. Each person also has their own £3,000 annual exempt amount and their own income tax position, so a couple who own a buy-to-let jointly may pay less in total than one owner selling alone.
Transfers between spouses or civil partners who live together are normally free of Capital Gains Tax, and the receiving partner takes over the original base cost. Some couples consider this before a sale, but the rules on genuine transfers are strict, and the title and any lender consent need to be dealt with properly, so take advice first. If the co-owners do not agree on selling, read our guide on whether one owner can sell a jointly owned property in Scotland.
What if I made a loss, own through a company or live abroad?
- Losses: if you sell at a loss, you can report it to reduce other gains in the same year or carry it forward. GOV.UK says you can claim up to 4 years after the end of the tax year of the sale.
- Limited company ownership: properties owned by a company are not subject to personal Capital Gains Tax. The company pays Corporation Tax on its gains instead, and the rules on extracting the money are different, so speak to your accountant.
- Non-residents: if you live outside the UK, you must report every sale of UK property within 60 days, even if there is no tax to pay. Our guides on selling a Scottish house while living abroad and on whether you need to be in Scotland to complete a sale explain the practical steps.
- Inherited rental property: your gain is normally measured from the value when you inherited. See what happens when you inherit a home in Scotland for the wider process.
Good to know: Capital Gains Tax is only one part of the picture. Before you sell, check whether you will face an early repayment charge on a buy-to-let mortgage, and read whether you need to tell your lender before you start selling.
Should I sell with my tenants in place?
Many landlords sell when a tenancy ends, but in Scotland a private residential tenancy can only be ended on specific grounds, and the process takes time. Selling with the tenant in place is possible, although it narrows the pool of buyers. Our guides on selling a house with a sitting tenant and selling a tenanted property in Scotland explain the options, and if your property was licensed for multiple occupants, see selling a former HMO.
How you sell does not change the tax rules. A sale to a cash buyer is taxed in exactly the same way as an open market sale. What it can change is timing and certainty: you know the price and the date of entry early, which makes it easier to plan for the 60 day deadline with your adviser.
At Sell My House Fast in Scotland, we can make a cash offer on your rental property and you choose a date of entry that suits you. There are no viewings to arrange around your tenants and no chain. Our offer will not reduce any tax you owe, but it can make the sale itself simpler.
Frequently asked questions
Is Capital Gains Tax different in Scotland?
No. Capital Gains Tax is a UK tax that has not been devolved, so the same rates, allowance and deadlines apply in Scotland. The rate you pay is worked out using the UK basic rate band of £37,700 for 2026 to 2027, not the Scottish income tax bands.
How much is the Capital Gains Tax allowance for 2026 to 2027?
The annual exempt amount is £3,000 per person. Joint owners each have their own allowance, which they can set against their share of the gain.
What happens if I miss the 60 day deadline?
HMRC may charge interest and a penalty if you do not report and pay on time. If you think you will miss the deadline, speak to your accountant or HMRC as soon as possible rather than waiting.
Can I deduct the cost of a new kitchen or bathroom?
It depends. Replacing a worn out kitchen or bathroom with a similar one is usually treated as a repair and is not deductible from the gain, although it may be allowable against rental income. Genuine improvements that add something new, such as an extension, can usually be deducted.
Do I pay Capital Gains Tax if I sell to a cash buyer?
Yes, if you make a taxable gain. The tax depends on your gain, not on who buys the property. Selling for cash simply gives you more certainty about the price and the date of entry, which helps you plan for the tax.
Thinking about selling your buy-to-let?
If you want a clear price and a date of entry you can plan your tax around, we can make you a no obligation cash offer on your rental property, with no viewings and no chain.
