Capital Gains Tax Revenue Surges as Landlords Exit Market

A record £16.9 billion in Capital Gains Tax (CGT) revenue was collected by HM Revenue & Customs (HMRC) in January 2026, according to data from the Office for National Statistics (ONS). This represents a 69% increase compared to the same period last year, driven largely by a wave of landlords leaving the private rented sector.

Landlord Exodus Fuels CGT Spike

Simply Business attributes the surge in CGT receipts to landlords selling properties in response to anticipated tax changes and reduced allowances. The company notes that concerns about potential alignment of CGT rates with income tax rates – which could have reached 45% – prompted some landlords to sell before the 2024 Autumn Budget. Even though the rate only increased to 24%, some landlords had already begun the process of selling.

The reduction in the tax-free capital gains allowance has also contributed to the increase. The allowance was reduced from £12,300 in 2022 to just £3,000 currently, meaning more landlords are now liable for CGT when selling properties. For higher-rate taxpayers, the CGT rate is currently 24% [1].

Property Transaction Trends

While CGT revenue is up, UK residential property transactions totalled 94,680 in January 2026, a marginal decrease (less than 1%) compared to January 2025 and a 5% drop from December 2025. Despite this slight dip, Frances McDonald, director of research at Savills, suggests the market started the year on a “firm footing,” with transactions exceeding those of 2024 and 2023 by 19% and 6% respectively.

Improved sentiment following the Chancellor’s Autumn Budget and falling mortgage rates are contributing factors. The average rate on a two-year fixed mortgage has fallen to its lowest level since 2022, benefiting first-time buyers in particular [1].

Market Sentiment and Strategic Exits

Jeremy Leaf, a north London estate agent, notes that while transactions were slightly lower, the stability suggests a positive trend. He observes that most sales are proceeding and increased choice is allowing buyers to take their time.

Experts suggest the increased CGT receipts don’t necessarily indicate panic selling, but rather reflect crystallized gains, proactive planning ahead of budget speculation, and strategic portfolio adjustments. Some landlords are choosing to exit on their own terms, while others are reshaping their portfolios to protect yields and reduce risk.

What Landlords Should Consider

• Model the Numbers: Calculate potential CGT at 24%, factoring in acquisition and improvement costs, and compare net proceeds against projected rental income over five years.
• Rank Assets: Identify the bottom 15% of properties based on net yield or management intensity for potential disposal.
• Plan Capital Strategically: Determine how released funds will be used – to reduce debt, improve gearing ratios, or reinvest in higher-yielding properties.

Reporting a Capital Gain to HMRC can be done through the Self Assessment tax return [2]. For disposals on or after 30 October 2024, the main CGT rates increased to 18% and 24% [3].