## Record Capital Gains Tax Receipts Reflect Landlord Market Exit

In January 2026, HM Revenue & Customs (HMRC) collected a record £16.9 billion in capital gains tax (CGT), marking a 69% increase compared to the previous year, according to the Office for National Statistics (ONS). This unprecedented surge is largely attributed to a significant number of landlords selling properties and leaving the private rented sector, as reported by Simply Business.

The spike in CGT receipts coincides with a period of uncertainty and change in the UK property market, where landlords have been responding to evolving tax policies and market conditions. Despite a slight decline in residential property transactions in January 2026, the volume of CGT payments suggests many landlords are crystallising gains and settling tax liabilities.

## Understanding the CGT Increase: Rates and Allowances

Residential property capital gains tax is charged at 18% for basic-rate taxpayers and 24% for higher-rate taxpayers. Simply Business highlights that the surge in CGT revenue is partly due to landlords accelerating sales ahead of anticipated tax changes. In summer 2024, concerns arose that CGT rates might align with income tax rates, potentially reaching 45%. Although the rate increase was limited to 24%, some landlords appear to have sold properties early to avoid higher rates.

Additionally, changes to the tax-free CGT allowance have had a significant impact. The allowance was reduced from £12,300 in 2022 to just £3,000 in 2026. This reduction means smaller-scale landlords who previously paid no CGT now face tax liabilities when selling property. Simply Business notes:
> “For higher-rate taxpayers, the rate is now 24%, which generates a significant amount of tax revenue.”

These factors combined have contributed to the record CGT receipts, reflecting both strategic disposals and the impact of tighter allowances.

## Property Market Activity and Outlook

HMRC data shows that UK residential property transactions in January 2026 totalled 94,680, a marginal decrease of less than 1% compared to January 2025, and 5% down on December 2025. Despite this slight dip, industry experts view the market as stable.

Frances McDonald, Director of Research at Savills, commented:
> “January’s housing market has started the year on a firm footing, with transactions running ahead of both 2024 and 2023 on a non-seasonally adjusted basis, up 19% and 6%, respectively.”

She added that many deals followed the Chancellor’s Autumn Budget, which clarified fiscal policy and improved market sentiment. The Bank of England’s recent reduction in average two-year fixed mortgage rates to their lowest since 2022 is expected to support market momentum, especially benefiting first-time buyers.

Jeremy Leaf, a north London estate agent and former RICS residential chairman, noted:
> “The data is a little historic although interesting as it covers the period immediately after the Budget when uncertainty reigned, so ‘marginally lower’ transactions is a positive in our view.”
> “Most sales are proceeding and relatively few folding without good reason but increased choice means buyers are taking their time with little urgency to complete quickly.”

## What This Means for Landlords

Large CGT receipts do not necessarily indicate panic selling but rather reflect crystallised gains, forward planning, and strategic portfolio reshaping. Some landlords are exiting the market on their own terms, while others are adjusting holdings to protect income and reduce risk exposure.

Landlords considering selling are advised to carefully calculate potential CGT liabilities before making decisions. This includes modelling CGT at 24%, deducting acquisition and improvement costs, and comparing net proceeds against projected rental profits over five years. Such analysis can help ensure decisions are financially sound rather than emotionally driven.

It is also prudent to rank properties by performance, identifying lower-yielding or management-intensive assets for potential disposal. Planning how to deploy released capital—whether to reduce debt, improve gearing ratios below 65%, or reinvest in higher-yielding properties—can strengthen overall portfolio health.

## Suggested internal link anchors

– capital gains tax
– private rented sector
– CGT allowance changes
– residential property transactions
– landlord tax planning
– portfolio reshaping
– rental profit comparison
– mortgage rates impact
– Autumn Budget property impact
– strategic disposals
– property market outlook
– tax liabilities on sale

## TLA update

TLA is launching a new Trusted Partners Hub in Q1 2026, featuring verified and approved service providers selected to support landlords, tenants, and property management businesses. We are inviting legal, trades, insurance, financial, mortgage, tenant screening, and other service providers to register their interest here: https://landlordassociation.org.uk/become-a-tla-service-partner/