HMRC collected a record £16.9 billion in Capital Gains Tax (CGT) in January 2026, according to figures from the Office for National Statistics (ONS). Many within the property sector believe the sharp rise reflects a growing number of landlords leaving the private rented market.
The increase comes during a period of major change for landlords, with rising costs, tighter regulation, tax changes, and ongoing uncertainty continuing to reshape the sector. At the same time, HMRC data also showed a slight slowdown in property transactions during January, suggesting the market remains cautious despite continued activity.
Residential property Capital Gains Tax currently stands at 18% for gains within the basic-rate band and 24% for higher-rate taxpayers. The latest figures show CGT receipts rising by 69% compared with the previous year, making January 2026 the highest month on record for Capital Gains Tax collected by HMRC.
Many believe the surge has been heavily influenced by landlords deciding to sell properties over the past year. Concerns around potential tax increases had already triggered speculation in 2024 that Capital Gains Tax rates could eventually be aligned with income tax rates, which may have pushed some landlords to sell earlier than planned.
Although the feared increase did not fully materialise, with the higher residential CGT rate settling at 24%, many landlords had already chosen to exit the market. The tax bills linked to those sales would then have become payable by the January filing deadline, helping explain the sharp increase in HMRC receipts.
Another factor behind the rise is the reduction in the tax-free CGT allowance. The allowance has fallen significantly in recent years, dropping from £12,300 in 2022 to just £3,000 today. This means landlords who may previously have paid little or no CGT are now facing tax liabilities when selling investment properties.
For smaller landlords in particular, this change has had a noticeable impact. Even modest gains on property sales can now trigger sizeable tax bills, especially when combined with higher rates for those paying tax above the basic threshold.
The figures are also being viewed as another sign of the gradual shift taking place across the rental sector. Many landlords are reassessing whether property investment still provides the returns it once did, particularly as mortgage costs, compliance requirements, and operating expenses continue to rise.
However, not every sale reflects panic or distress. Some landlords are making strategic decisions to restructure their portfolios, release equity, or reduce exposure to lower-performing properties. Others are using the opportunity to strengthen cash flow or move funds into different types of investments.
At the same time, the wider housing market has remained relatively active despite the softer transaction figures for January. HMRC data showed that residential property transactions totalled 94,680 during the month. While this was slightly lower than the same period a year earlier and down from December, activity levels remained ahead of both 2023 and 2024 on a non-seasonally adjusted basis.
Some analysts believe confidence improved following greater clarity around government fiscal policy after the Autumn Budget. Mortgage rates have also gradually eased, helping improve affordability for some buyers, particularly first-time purchasers entering the market.
Industry figures suggest the market remains steady rather than weak. Buyers are still proceeding with purchases, although many are taking more time before committing due to increased choice and ongoing uncertainty around the economy and borrowing costs.
For landlords considering selling, the current environment highlights the importance of careful financial planning. Rather than making decisions based purely on sentiment, many advisers recommend calculating the likely Capital Gains Tax bill first and comparing this with projected future rental income.
Reviewing portfolio performance property by property has also become increasingly important. Some landlords are choosing to dispose of lower-yielding or more management-intensive assets while retaining stronger-performing properties that continue to generate reliable returns.
Others are using released capital to reduce borrowing, improve gearing levels, or reinvest into areas offering stronger yields and better long-term prospects.
The record CGT receipts therefore reflect more than just landlords leaving the market. They also reveal how the private rented sector is continuing to evolve, with investors adapting their strategies in response to changing financial and regulatory conditions.
As 2026 progresses, many landlords are likely to continue weighing up whether to expand, restructure, or reduce their portfolios. For some, selling now offers certainty and a clean exit. For others, the focus remains on adapting to a market that looks very different from the one they entered years ago.
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