Allowable Deductions for Capital Gains Tax on UK Property: Full Checklist & Guide

Key Takeaways

1. Understanding allowable deductions for capital gains tax (CGT) on UK property ensures you reduce your CGT bill and avoid overpaying HMRC.
2. You can deduct genuine costs such as purchase price, stamp duty, legal fees, estate agent fees, and qualifying property improvements. Day-to-day maintenance and running costs generally are not deductible.
3. Meticulous evidence-gathering and retention—including digital receipts—are vital to audit-proof your capital gains tax submission.
4. Failing to claim allowable expenses, or incorrectly claiming non-deductible items, can result in HMRC disputes, penalties, and higher tax bills.
5. Only works that improve or extend the property are deductible; routine repairs and maintenance are not.
6. Key CGT rules like principal private residence relief may exempt all or part of your gain if you have lived in the property—specific eligibility matters.
7. Using a full, up-to-date checklist of CGT deductions means you won’t overlook claimable expenses at sale.
8. Go-Legal AI offers tailored guidance and digital tools to help claim every deduction, keeping your filing stress-free and fully compliant.

Complete Checklist: Allowable Deductions for Capital Gains Tax on UK Property

When selling property in the UK, it’s easy to miss costs you’re entitled to deduct. Many landlords, business owners, and private sellers overpay capital gains tax because they’re unsure which expenses qualify or they lack the evidence HMRC expects.

Understanding allowable CGT deductions for UK property is crucial for anyone—whether you’re selling a rental, business premises, or your main home. Accurate claims mean a lower tax bill and less risk of compliance headaches; mistakes can cost thousands or expose you to HMRC scrutiny.

You’ll discover below the core costs you can and cannot claim, including stamp duty, legal and agent fees, property improvements, and robust record-keeping requirements. You’ll also get practical checklists, real-world examples, and expert tips to help you audit-proof your CGT calculations. With our smart tools, you can build a fully compliant deduction file—giving you total confidence at tax time.

What Are Allowable Deductions for Capital Gains Tax on UK Property?

Allowable deductions are legitimate costs you subtract from your gains when selling or disposing of property. These reduce your “chargeable gain” and directly lower your capital gains tax bill. HMRC only accepts deductions directly related to buying, improving, or selling the property.

Getting deductions right is essential: claim every eligible cost to cut your CGT responsibly, but avoid over-claiming, which can trigger investigations or penalties.

Typical allowable deductions include:

• Costs of purchase and sale (legal/conveyancing fees, agent fees)
• Stamp Duty Land Tax (SDLT) paid when buying
• Qualifying structural improvements and enhancements
• Professional survey or valuation fees necessary for the transaction
• Advertising costs to market the property

Remember, these deductions are different to the CGT annual exempt amount—currently £6,000 for individuals (2023/24)—which is a separate tax-free threshold claimed after expenses.

Allowable vs Non-Allowable Deductions: What Can You Claim for CGT?

Distinguishing between claimable and non-claimable costs is crucial. HMRC allows deduction of costs that relate to purchasing, improving, or disposing of a property—but not general upkeep or running costs.

Allowable Deductions:

• Stamp Duty Land Tax (SDLT) at purchase
• Estate agent and solicitor/conveyancer fees (buying and selling)
• Capital improvements (building extensions, new bathrooms, permanent upgrades)
• Professional valuations and required surveys
• Planning permission and architects’ fees for approved improvements
• Advertising the property for sale

Non-Allowable Costs:

• Routine maintenance and repairs (painting, tiling, repairs)
• Mortgage interest or loan repayments
• Council tax, utility bills, insurance premiums
• Costs already claimed for income tax (e.g. letting agent fees for rental)
• Fines, penalties, or any unrelated expenditure

Complete Checklist of Claimable Expenses for Property CGT

To ensure every eligible deduction is captured, use the checklist below when preparing your CGT calculation. This helps prevent expensive errors or missed claims.

Checklist: Allowable Deductions for CGT on UK Property

† Only deductible against rental income, not CGT.

Key Deductions Table: What Costs Can I Offset Against Capital Gains Tax?

Understanding why each deduction matters helps you defend your claim and avoid compliance headaches.

Maintenance vs Improvements: Which Costs Are Deductible for CGT?

HMRC differentiates strictly:

• Maintenance/Repairs (Not Deductible):
  Costs aimed at keeping the property in working order (e.g., painting, replacing broken windows, mending pipes) cannot be offset against your capital gain.
• Improvements (Usually Deductible):
  Expenditure that adds value, upgrades features, or extends the building—such as a new conservatory, conversion, or replacing a single-glazed window with double glazing for the first time—these may be deducted.

Step-by-Step Guide: How to Calculate CGT Allowable Deductions on a Property Sale

Calculating your CGT liability correctly can dramatically reduce your tax burden. Follow these steps:

1. Work out your sale proceeds: The amount you receive for the property.
2. Subtract what you paid to buy: Original purchase price.
3. Deduct direct purchase costs: Stamp duty, legal and survey fees.
4. Deduct improvements during ownership: Only qualifying, value-adding works.
5. Deduct sale-related costs: Estate agent, legal fees, required valuations, and advertising.
6. Calculate your chargeable gain: Deduct total expenses from proceeds. Subtract your annual CGT allowance.
7. Apply the correct CGT tax rate: As of April 2024: 18%/24% (residential), or 10%/20% (other UK property).

How to Gather and Keep the Right Evidence for HMRC (Including Digital Receipts)

HMRC expects documentary evidence for every claim in your CGT calculation, and digital receipts are fully acceptable as long as they’re complete and readable.

Key evidence includes:

• Original invoices/receipts for allowable legal, agent, planning, and improvement costs
• Bank statements proving payment
• SDLT certificates and completion statements
• Planning permission and completion certificates
• Electronic records and clear digital images (unaltered, properly labelled)

Best Practices for Record-Keeping:

• Scan or photograph paperwork immediately and name with property, date, and expense type.
• Use cloud or legal tech storage (such as Go-Legal AI’s document manager) so nothing is lost.
• Retain all evidence for at least six years (HMRC investigation window), or up to 20 years if there is suspected evasion.

Common Mistakes Property Sellers Make with CGT Deductions (and How to Avoid Them)

Many UK sellers fall into these CGT traps:

• Deducting repairs or maintenance (not allowed):
  Only improvements count.
  
  Solution: Check if the cost adds permanent value or is just routine.
• Incomplete or unclear evidence:
  Part-receipts, faded printouts, or undocumented bank transfers may be disallowed.
  
  Solution: Use digital tools to collect and store full receipts with every claim.
• Missing allowable costs:
  Stamp duty or legal fees during purchase are often missed if bought via a mortgage broker.
  
  Solution: Cross-reference expenses with a thorough template.
• Failing to record the distinction between improvement and repair:
  Especially if doing pre-sale works.
  
  Solution: Keep a contemporaneous record of all works, with clear descriptions and invoices.

If errors are spotted before submitting your tax return, correct them in your online filing. After submission, you have twelve months to amend. If in doubt, voluntarily notify HMRC—it can reduce penalties if a compliance check follows.

CGT Deductions for Special Situations: Buy-to-Let, Mixed-Use, and Former Homes

Different property uses affect allowable CGT deductions:

• Buy-to-Let:
  Most core purchase, improvement, and sale costs are claimable, but routine maintenance and letting fees (already claimed against rental income) are not.
• Mixed-Use Properties:
  Split capital improvements and costs between residential and commercial portions, usually by area or usage time.
• Former Homes (Principal Private Residence Relief):
  You may claim partial or full relief for time the property was your main residence plus the last nine months. Only improvements relating to non-exempt periods are fully deductible.

How Go-Legal AI Simplifies Allowable Deductions for CGT on UK Property

Managing capital gains tax on property can be complex, but our platform simplifies every step:

• Guides you with smart prompts to capture every allowable deduction, tailored to your property type.
• Generates a digital, audit-ready evidence file for every expense, including digital receipts.
• Offers a customisable checklist—perfect for residential, buy-to-let, or mixed-use property.
• Integrates a simple CGT deduction calculator, so you never miss a cost or make a risky claim.
• Identifies potential red flags, suggests missing evidence, and stores your submission-ready file securely.

Frequently Asked Questions

Can I deduct stamp duty and solicitor fees from my CGT calculation?

Yes, both stamp duty paid on purchase and legal fees for buying and selling the property are fully allowable. Store clear documentation for every claim.

Are surveyors’ or valuation fees allowable for CGT?

Yes, if directly connected to the purchase or sale process. Survey or valuation fees for mortgage purposes or sale appraisals qualify.

How far back can I claim property improvement expenses?

You can claim eligible improvements made any time during your ownership, if you have proof that the improvement is still present at the time of sale.

Does HMRC accept digital receipts as proof for CGT deductions?

Yes, as long as the digital receipt or scan is unaltered, complete, and clearly linked to your property and expense type. Use our platform to ensure everything is correctly archived.

What should I do if I’ve lost receipts for allowable costs?

Gather alternative evidence (like bank statements, emails, photographs) and provide a detailed explanation. HMRC may still allow the claim if your evidence is reasonable.

What if I lived in the property for only part of the ownership period?

You may qualify for principal private residence relief covering the time you lived in the property, plus up to nine months’ grace at the end. The rest of your gain is apportioned.

Can I deduct VAT paid on renovation work for CGT purposes?

Yes, provided you have not already reclaimed that VAT and the work qualifies as a property improvement.

How do I claim CGT deductions for inherited or gifted property?

Use the property’s market value at the date of inheritance or gift as your “acquisition cost.” Only improvements and sale expenses incurred after that date are claimable.

Are letting agent fees deductible for CGT?

No, management fees for letting are not claimable for CGT if you already claimed them against income tax. Sales-related letting fees (to dispose of the property) are deductible.

What costs are most commonly missed by UK property sellers?

Stamp duty, initial purchase legal fees, and planning or architect’s costs for property improvements. Our digital checklist cross-references these so nothing is overlooked.

Create Your Capital Gains Tax Deductions Checklist with Go-Legal AI Today

With the complexity of HMRC rules and strict evidence standards, missing a single allowable cost or misclassifying an expense can mean overpaying tax or triggering a compliance check. Our AI-powered tools walk you through every step—ensuring you capture all eligible deductions, store robust evidence, and export a summary ready for your adviser or digital tax submission.

Avoid stress and unnecessary tax bills with an automated, exportable CGT deduction checklist built with our platform—trusted by hundreds of property sellers and business owners across the UK.

Maximise Your Capital Gains Tax Savings with Go-Legal AI

Claiming all allowable deductions for capital gains tax on UK property is key to protecting your profits and staying fully compliant. If you overlook eligible costs or claim the wrong items, you risk overpaying or attracting unwanted HMRC attention. With our evidence-backed checklists, step-by-step guides, and legally rigorous approach, you can approach any property sale with confidence.

Stop losing out on tax savings due to paperwork errors or uncertainty. Our tailored, user-friendly platform empowers you to record every eligible expense, organise evidence, and create an HMRC-ready CGT file—fast. Start your free trial today and see how much you could save on your next property transaction.