When you sell or dispose of a property that isn’t your main home, you may face a Capital Gains Tax (CGT) bill on the profit you’ve made. Most people assume that profit is simply the difference between what they paid and what they sold for — and often it is. But in a surprising number of situations, one of those figures isn’t a straightforward purchase price at all, and has to be established by a professional valuation.
Getting that valuation right matters, because it directly affects how much tax you pay, and because HMRC can and does challenge figures it considers wrong. Here’s what you need to know about the role of property valuations in Capital Gains Tax.
What is the capital gains tax on property?
Capital Gains Tax is charged on the gain you make when you dispose of an asset that has risen in value. For property, it typically applies to second homes, buy-to-let investments, inherited property and property you gift or transfer — not to your main home, which is usually covered by Private Residence Relief.
For UK residential property, CGT is currently charged at 18% for basic-rate taxpayers and 24% for higher-rate taxpayers, after deducting the annual tax-free allowance (£3,000 per person for the 2025/26 tax year). Where tax is due, a UK resident must report and pay it within 60 days of completion through HMRC’s online service. The tax itself is a matter for you and your accountant — but the property value it’s based on is where a chartered surveyor comes in.
Why does CGT need a property valuation?
Your gain is the difference between what a property was worth when you acquired it and what it’s worth when you dispose of it. Where either of those points is an ordinary sale at market price, the figure is obvious. Where it isn’t — because you inherited the property, were given it, have owned it for decades, or are selling only part of it — that value has to be assessed properly. And because it determines the tax, HMRC will scrutinise it.
When you need a valuation for CGT
These are the most common situations where a professional valuation is required:
Inherited property. When you inherit a property, its value at the date of death — the probate value — normally becomes your “base cost” for CGT. If you later sell, your gain is measured from that figure. An accurate date-of-death valuation is therefore essential, and if one was never properly established, it can be valued retrospectively before a sale.
Gifted property or transfers to connected persons. If a property is given away or transferred to a family member — or anyone “connected” to you — the tax rules treat it as changing hands at full market value, regardless of what (if anything) actually changed hands. That deemed market value becomes the base cost, so a valuation at the date of the gift is needed to fix it and to protect you if HMRC later enquires.
Property owned since before 31 March 1982. For assets held that long, CGT is calculated using the property’s value as at 31 March 1982 rather than the original price paid. This “rebasing” requires a retrospective valuation at that historic date.
Part-disposals. If you sell only part of a property or piece of land — a portion of a garden, for example — the calculation apportions your original cost between the part sold and the part kept. That means the part you retain also has to be valued before the gain can be worked out.
Other situations. Valuations are also often needed where a property has changed use, moved into or out of a company or trust, or where a non-resident is relying on the April 2015 rebasing rules.
Retrospective valuations explained
Several of the situations above call for a retrospective — or backdated — valuation: an assessment of what a property was worth at a specific date in the past. This isn’t guesswork or a figure adjusted for inflation. A chartered surveyor reconstructs the market as it stood at that date, using contemporaneous comparable sales and historic market evidence to arrive at a defensible figure. It’s a specialist skill, and one that ordinary automated valuations simply can’t provide.
Why a RICS Red Book valuation matters
For tax purposes, the type of valuation you use makes a real difference. A formal “Red Book” valuation — prepared by an RICS Registered Valuer to the profession’s global standards — is evidence-based, independent and defensible. That matters for two reasons.
First, accuracy protects you in both directions. Too low a base cost inflates your gain and leaves you overpaying tax; a figure that can’t be justified invites challenge and possible penalties. Second, if HMRC or the District Valuer questions your figure, a Red Book valuation comes with the reasoning and comparable evidence to support it — the kind of report your accountant can rely on and that stands up to scrutiny.
Getting it right
Capital Gains Tax turns on the numbers, and where those numbers depend on a valuation, it pays to get a properly qualified surveyor involved early. A well-supported figure gives you certainty, keeps your tax bill correct, and saves the stress of a dispute later.
At Taylor Chartered Surveyors, our RICS Registered Valuers prepare formal property valuations for Capital Gains Tax and probate, both current and retrospective, across London and the South East — reported for professional reliance and defended with HMRC where needed. Get in touch to discuss what your situation requires.
This article is general information, not tax advice. For advice on your specific Capital Gains Tax position, consult a qualified accountant or tax adviser alongside your valuation.
Frequently asked questions
Do I need a valuation to work out Capital Gains Tax?
You need one whenever the property’s acquisition or disposal value isn’t a straightforward market sale — for example with inherited property, gifts, assets held since before 31 March 1982, or part-disposals. In these cases a professional valuation fixes the figure your gain is calculated from.
What is a retrospective valuation?
It’s a valuation of what a property was worth at a specific past date, such as a date of death or 31 March 1982. A chartered surveyor determines it using historic comparable evidence and market data from that period.
Who should carry out a CGT property valuation? An RICS Registered Valuer, using a formal Red Book valuation. This ensures the figure is independent, evidence-based and defensible if HMRC or the District Valuer queries it.