What should I do with money from selling a house? — UK guide

Updated March 2026 House sale proceeds Typical: £50,000–£500,000

Selling a house generates one of the largest single cash events most people will ever experience, and it comes wrapped in more tax complexity than almost any other windfall. Whether you're selling a rental property, a second home, or a property that was once your main home but isn't anymore, the first question is not 'what do I invest this in?' — it's 'how much do I actually have after Capital Gains Tax?'

For a primary residence you've lived in throughout ownership, the answer is simple: zero CGT, thanks to Private Residence Relief. But if the property was a buy-to-let, a second home, or a home you moved out of years ago, you could owe 18–24% CGT on the gain (rates since October 2024 budget) within 60 days of completion. That tax bill needs to be on your radar before you deploy a single penny. The good news is that you have legitimate tools to reduce it — your annual CGT allowance, losses from other disposals, and pension contributions that reduce adjusted net income.

What should I do with spare cash?

A UK-specific guide — personalised hierarchy, allocation, and fund picks. Not regulated financial advice.

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General information only — not FCA-regulated financial advice. We are not FCA-authorised. Consult an FCA-authorised adviser for personal recommendations.

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Key considerations

Frequently asked questions

Do I pay CGT if I'm selling my main home?
No — if the property was your main (and only) home for the entire period of ownership, Private Residence Relief covers the entire gain and no CGT is due. The exemption is automatic; you don't need to apply. If you had periods where the property wasn't your main home — you moved abroad, let it fully, or moved in with a partner — PRR only covers the proportion of time it was your main residence, plus the final 9 months of ownership.
I sold a buy-to-let — when do I need to pay the tax?
Within 60 days of completion, you must report the disposal and pay any CGT due via HMRC's online property reporting service. This is separate from your annual Self Assessment return. The 60-day clock starts from the completion date, not exchange. If you miss this deadline, HMRC issues automatic late filing penalties (£100 for up to 6 months late, rising to 5% of the tax due for longer delays). Don't wait until January — calculate your liability as soon as you receive your conveyancer's completion statement.
I've sold my home and bought a cheaper one — what should I do with the equity released?
If you've downsized from your primary residence, the gain is fully covered by Private Residence Relief, so there's no CGT. The equity released is clean capital. Priority: if you're pre-retirement, maxing ISA and pension contributions over several years is highly efficient. If you're in or near retirement, the balance between accessible ISA savings and less-accessible SIPP contributions matters more. If you intend to use the money within 3–5 years (e.g. helping a child buy), keep it in cash ISAs and top savings accounts rather than equity markets.
Can I reinvest house sale proceeds into another buy-to-let without paying CGT?
No — unlike the US '1031 exchange', the UK has no CGT deferral mechanism for rolling property gains into a new purchase. CGT is due on the gain from the sale, regardless of what you buy next. What you can do: use your annual CGT allowance (£3,000 in 2026/27), offset losses from other capital disposals in the same year, and use pension contributions to reduce your tax rate on the gain. Some investors incorporate their property portfolio to manage CGT differently, but this involves SDLT implications — take specialist advice.
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General educational information only. Not FCA-regulated financial advice. We are not authorised by the FCA. Consult an FCA-authorised adviser for personal recommendations.