- The Capital Gains Tax Annual Exempt Amount is the amount of your overall net chargeable gains that is exempt from CGT for the tax year. It applies to your total gains after allowable losses and relevant reliefs, rather than separately to each asset you sell.
- The Annual Exempt Amount is £3,000 for individuals, personal representatives and trustees for disabled people in the 2024/25, 2025/26 and 2026/27 tax years. Most other trustees receive an allowance of £1,500.
- Most individual gains are taxed at 18% to the extent that they fall within the unused basic-rate band and 24% above it. The final rate depends on the individual’s taxable income and gains.
The Capital Gains Tax Annual Exempt Amount is £3,000 for the 2025/26 and 2026/27 tax years. It was reduced from £12,300 in 2022/23 to £6,000 in 2023/24 and then to £3,000 from 2024/25.
For example, an investor who made a £10,000 chargeable gain in 2022/23 could have covered the full gain with the £12,300 Annual Exempt Amount. The same £10,000 net gain in 2025/26 or 2026/27 would leave £7,000 chargeable after applying the £3,000 exemption, before considering any allowable losses or additional reliefs.
For most individual gains, the lower CGT rate increased from 10% to 18%, while the higher rate increased from 20% to 24% for disposals made on or after 30 October 2024. A gain can be split between the two rates where only part of the basic-rate band remains available.
What is Capital Gains Tax and How Does it Work in the UK?
CGT is a tax you pay on the profit or “gain” you make when you dispose of an asset, that is, when you take any action that results in you no longer owning an asset that has increased in value.
This includes selling property, shares, crypto, or even giving away a valuable item. You don’t pay tax on the full sale price, only on the taxable gain, which is the difference between what you paid for the asset and what you sold or transferred it for.
Let’s say you bought a second property for £200,000 and sold it later for £320,000. The gain here is:
- £320,000 (sale price) – £200,000 (purchase price) = £120,000 gain
Now, subtract the CGT allowance for the 2025/26 tax year:
- £120,000 – £3,000 (annual CGT allowance) = £117,000 taxable gain
Depending on your taxable income, the chargeable gain may be taxed at 18%, 24% or a combination of both rates.
For this simplified example, assume that you are a higher-rate taxpayer, have no allowable losses, deductible costs or additional reliefs and have the full £3,000 Annual Exempt Amount available:
- £117,000 × 24% = £28,080 in CGT
UK residents are generally within the scope of Capital Gains Tax on chargeable gains from UK and overseas assets, subject to residence rules and any available exemptions or reliefs. Non-UK residents generally need to consider UK CGT when they dispose of UK property or land, although additional rules can apply in specific circumstances.
The amount of CGT you owe depends on your overall chargeable gains after allowable losses and reliefs, your taxable income and how much of your basic-rate band remains available. Separate tax treatment applies to qualifying Business Asset Disposal Relief gains and carried interest.
Keep records of each disposal, including the acquisition cost, disposal proceeds, allowable expenses, valuations and relevant contracts. Not every gain or loss must be entered on a tax return. The reporting requirement depends on whether CGT is due, the type of asset, your Self Assessment status and the total disposal proceeds.
CGT applies when you dispose of an asset, not only when you sell it. Disposal can include gifting, exchanging, transferring ownership, or even receiving compensation, such as an insurance payout, if the asset has increased in value.
CGT Allowance 2025/26 and 2026/27: What Has Changed This Tax Year?
Understanding how CGT rules have evolved in recent years is key to managing your tax liabilities effectively. Both the annual exempt amount and applicable tax rates have undergone significant changes, particularly for individuals selling residential property, investors, and fund managers. The table below outlines the primary shifts in CGT allowances and rates from 2019 through the 2026/27 tax year.
Capital Gains Tax Allowance and Rate Changes (2019–2026)
| Tax Year | CGT Allowance for Individuals | Basic/High Rates for Most Assets | Residential Property | Carried Interest | Key Observations |
|---|---|---|---|---|---|
| 2026/27 | £3,000 | 18% / 24% | 18% / 24% | Income Tax regime | BADR rate increases to 18% |
| 2025/26 | £3,000 | 18% / 24% | 18% / 24% | 32% | BADR rate is 14% |
| 2024/25, from 30 October 2024 | £3,000 | 18% / 24% | 18% / 24% | 18% / 28% | Main CGT rates increased |
| 2024/25, to 29 October 2024 | £3,000 | 10% / 20% | 18% / 24% | 18% / 28% | Residential higher rate had already fallen to 24% |
| 2023/24 | £6,000 | 10% / 20% | 18% / 28% | 18% / 28% | First allowance reduction |
| 2022/23 | £12,300 | 10% / 20% | 18% / 28% | 18% / 28% | Final year with a £12,300 allowance |
| 2020/21 to 2021/22 | £12,300 | 10% / 20% | 18% / 28% | 18% / 28% | Allowance remained at £12,300 |
| 2019/20 | £12,000 | 10% / 20% | 18% / 28% | 18% / 28% | Allowance was £12,000 |
With these tighter rules in place, reviewing your asset portfolio and timing disposals carefully can help reduce exposure and maintain an efficient tax position.
How to Calculate Your Capital Gains Tax Bill for 2025/26 or 2026/27
Calculating your Capital Gains Tax bill for 2025/26 or 2026/27 involves more than identifying the applicable tax rate. You must consider when and how you disposed of the asset, deduct eligible costs and allowable losses, apply the Annual Exempt Amount and account for any available reliefs.
Whether the asset was sold, gifted or transferred, the disposal date and your taxable income can affect the tax year, applicable CGT rate and final liability.
Does the date of purchase or sale matter?
The disposal date determines the tax year in which a capital gain or loss arises. Where an asset is sold under an unconditional contract, the disposal date is normally the date on which the contract is made. For a property sale, this is usually the exchange-of-contracts date rather than the completion date. Where a contract is conditional, the disposal date is generally the date on which the conditions are satisfied.
The separate 60-day reporting and payment deadline for a taxable UK residential property disposal is normally measured from the completion date.
The acquisition date and allowable acquisition cost are used to calculate the gain or loss, but the acquisition date does not normally determine the tax year in which the disposal is taxed.
For example:
You bought a second home in 2015 for £150,000. You enter into an unconditional contract to sell it for £300,000 in May 2025, with completion taking place later.
- Your initial gain is £150,000 before deducting eligible acquisition, disposal and capital improvement costs.
- Because the unconditional contract was made during the 2025/26 tax year, the gain is generally calculated using the 2025/26 Annual Exempt Amount and CGT rates.
Therefore, the relevant disposal date determines the tax year, while the acquisition cost and eligible expenses help determine the amount of the gain.
Let’s assume you made a £25,000 chargeable gain from disposing of a UK residential property and you are a higher-rate taxpayer. For this simplified illustration, each date below is treated as the relevant CGT disposal date. The example assumes that you have no allowable losses, deductible costs or additional reliefs and that the full Annual Exempt Amount is available.
Scenario A: Disposal date of 5 April 2024 (2023/24 tax year)
- Annual Exempt Amount: £6,000
- Chargeable gain after the exemption: £25,000 − £6,000 = £19,000
- Residential property CGT rate: 28%
- CGT due: £19,000 × 28% = £5,320
Scenario B: Disposal date of 5 April 2025 (2024/25 tax year)
- Annual Exempt Amount: £3,000
- Chargeable gain after the exemption: £25,000 − £3,000 = £22,000
- Residential property CGT rate: 24%
- CGT due: £22,000 × 24% = £5,280
Scenario C: Disposal date of 6 April 2025 (2025/26 tax year)
- Annual Exempt Amount: £3,000
- Chargeable gain after the exemption: £25,000 − £3,000 = £22,000
- Residential property CGT rate: 24%
- CGT due: £22,000 × 24% = £5,280
Scenario D: Disposal date of 6 April 2026 (2026/27 tax year)
- Annual Exempt Amount: £3,000
- Chargeable gain after the exemption: £25,000 − £3,000 = £22,000
- Residential property CGT rate: 24%
- CGT due: £22,000 × 24% = £5,280
Why This Matters
The higher residential property CGT rate fell from 28% to 24% on 6 April 2024, while the Annual Exempt Amount fell from £6,000 to £3,000 on the same date.
In this simplified example, a disposal on 5 April 2024 produces a CGT bill of £5,320. Disposals on 5 April 2025, 6 April 2025 and 6 April 2026 each produce a bill of £5,280. The later disposals therefore result in £40 less CGT.
The result is unchanged between 2025/26 and 2026/27 because the Annual Exempt Amount remains £3,000 and the higher individual CGT rate remains 24%.
What if you gifted the asset?
Disposing of an asset by gifting it (other than to a spouse or civil partner) is still a chargeable event for CGT purposes. You’ll be treated as if you sold the asset at market value, and any gain is calculated accordingly, even if no money changed hands.
Imagine you give your adult child a second property that has increased in value. No money changes hands, but the asset has increased in value by £25,000.
Even though you didn’t sell the property, this is still treated as a disposal for Capital Gains Tax purposes. HMRC treats the gift as if you had sold the asset at its market value on the date of the gift.
CGT Calculation on a Gift (2025/26 tax year)
- Gain made (based on market value at the time of gift): £25,000
- Annual CGT allowance: £3,000
- Taxable gain: £25,000 − £3,000 = £22,000
- CGT rate for higher-rate taxpayer (residential property): 24%
- Tax owed: £22,000 × 24% = £5,280
Even though you did not receive cash, the gift is generally treated as a disposal at market value. This simplified calculation assumes that you have no allowable losses, deductible costs or additional reliefs and that the full Annual Exempt Amount is available.
Transfers between spouses or civil partners who are living together are generally made on a no-gain, no-loss basis. This means that the transfer does not normally create an immediate CGT charge, but the recipient usually takes over the transferor’s original acquisition cost when calculating a future gain.
When must you report and pay?
UK property disposals can have a separate 60-day reporting deadline measured from completion. This can apply in addition to Self Assessment reporting. The reporting requirements for UK residents, non-UK residents and other types of gains are explained in the dedicated reporting section later in this guide.
Step-by-Step: Capital Gains Tax Calculation
1. Work out your gain
Subtract the original purchase price from the sale (or disposal) value:
Sale price – Purchase price = Gain
If the asset was jointly owned, only include your share of the gain.
2. Deduct allowable costs
Reduce your gain by subtracting eligible buying, selling and capital improvement costs, including:
- Solicitor and estate agent fees directly connected with buying or selling the asset
- Stamp Duty Land Tax or other eligible acquisition costs
- Capital improvement costs, such as the cost of adding an extension
Normal maintenance costs, such as repairs or decorating, cannot generally be deducted from a property gain. See HMRC’s guidance on costs that can be deducted when calculating a property gain.
3. Apply the 2026/27 CGT allowance
Subtract your £3,000 tax-free allowance (£1,500 for most trusts). This is the portion of gains you can keep without paying CGT.
4. Apply the correct CGT rate
Use your income level to determine which rate applies:
- 18% for residential property gains within the basic-rate band
- 24% for residential property gains above the basic-rate threshold
5. Calculate your final CGT bill
Multiply the taxable portion of your gain by the appropriate rate. If your gain spans income tax bands, divide the amount and apply each rate accordingly.
For accurate results, you can also use the Capital Gains Tax calculator, which reflects the latest rates and personal tax circumstances.
What happens if you make a loss when selling an asset?
You do not pay Capital Gains Tax when an allowable disposal produces a capital loss. This can happen, for example, when shares or property are disposed of for less than their allowable acquisition cost.
If you make an allowable loss on one asset and a chargeable gain on another in the same tax year, the loss can reduce the gain. Any qualifying unused loss can normally be carried forward and used against gains in later years.
You must report the capital loss to HMRC within four years after the end of the tax year in which the disposal occurred.
Does the date of the sale or loss matter?
Yes. An allowable capital loss belongs to the tax year in which the disposal occurs. The same disposal-date rules apply to gains and losses, including the contract-date rules explained earlier in this guide.
The acquisition date and allowable acquisition cost help determine the amount of the loss, but they do not normally determine the tax year to which the loss belongs.
To carry an unused allowable loss forward, you must report it to HMRC within four years after the end of the tax year in which the disposal occurred. A loss that is not reported within the applicable period will not normally be available to offset gains in later tax years.
Suppose you sell a second property on 5 April 2026, the final day of the 2025/26 tax year, for £15,000 less than its allowable acquisition cost. The £15,000 difference may be treated as an allowable capital loss, subject to the normal CGT rules.
Because the disposal took place on 5 April 2026, the loss belongs to the 2025/26 tax year. You can use it against allowable chargeable gains made in the same tax year.
If the loss is not fully used, it can normally be carried forward and deducted from qualifying gains in later tax years. To preserve the loss, you must report it to HMRC within four years after the end of the 2025/26 tax year, which means by 5 April 2030.
If the loss is not reported within that period, it will not normally be available to offset future chargeable gains.
When and How to Report and Pay Capital Gains Tax in 2025/26 and 2026/27?
Once you have calculated your gain and established that CGT is due, the reporting method and deadline depend on the asset you disposed of.
Key Capital Gains Tax Reporting Deadlines for 2025/26 and 2026/27
If CGT is due on the sale or disposal of UK residential property, you must report and pay the tax within 60 days of completion through a Capital Gains Tax on UK property account.
If you are registered for Self Assessment, you must normally include the disposal in your tax return as well. Reporting it through Self Assessment does not replace the separate 60-day property deadline.
- Gains made during the 2025/26 tax year must normally be reported through online Self Assessment and paid by 31 January 2027.
- Gains made during the 2026/27 tax year must normally be reported through online Self Assessment and paid by 31 January 2028.
How to Report Capital Gains Tax Using HMRC Services
Other chargeable gains can generally be reported through:
- A Self Assessment tax return
- HMRC’s real-time Capital Gains Tax service, where the taxpayer and gain are eligible
The real-time service cannot be used to report gains on UK residential property.
If you are already registered for Self Assessment, you must generally report relevant disposals where the total amount received from selling the assets exceeds £50,000, even where your total taxable gains remain below the Annual Exempt Amount.
HMRC may charge late-filing penalties, late-payment penalties and interest where a taxable gain is not reported or paid by the applicable deadline. UK property disposals can have a separate 60-day reporting deadline, so taxpayers should not wait until their Self Assessment return is due.
What are the Ways to Reduce Your Capital Gains Tax in 2026/27?
While the Annual Exempt Amount is now £3,000, there are still legitimate planning measures that may reduce your Capital Gains Tax liability in the 2026/27 tax year. The available options depend on the assets you own, your taxable income, allowable losses and eligibility for reliefs.
Here are some practical ways to lower your CGT liability:
- Use your Annual Exempt Amount: The Annual Exempt Amount is £3,000 for individuals in 2026/27. You only pay CGT on overall net chargeable gains above this amount, after deducting allowable losses and applying any relevant reliefs. Any unused allowance expires at the end of the tax year and cannot be carried forward.
- Offset gains with allowable capital losses: Allowable losses made in the same tax year must generally be deducted from chargeable gains. Qualifying unused losses that have been reported to HMRC can normally be carried forward and used against gains in later years.
- Consider Business Asset Disposal Relief: Qualifying gains from disposals made on or after 6 April 2026 are taxed at the 2026/27 BADR rate of 18%, subject to the eligibility conditions and £1 million lifetime limit.
- Consider transfers to a spouse or civil partner: Transfers between spouses or civil partners who are living together are generally made on a no-gain, no-loss basis. The transfer does not normally create an immediate CGT charge, but the recipient usually takes over the original acquisition cost for a future disposal.
- Time your disposals strategically: The timing of a disposal can affect the tax year in which the gain arises, the Annual Exempt Amount available, the losses and reliefs that can be used and how much of the gain falls within the 18% or 24% CGT rate. Consider the relevant disposal-date rules before completing a transaction.
The effect of each planning measure depends on your taxable income, available losses, the assets involved and whether the relevant eligibility conditions are met.
Capital Gains Tax Exceptions Explained: Carried Interest, Business Asset Disposal Relief and Investment Gains
Not all capital gains are treated equally, and if you’re a fund manager, business owner, or active investor, the standard CGT rules may not fully apply to you. These exceptional cases often come with unique tax rates, qualifying conditions, or reliefs that can significantly affect your tax liability.
Let’s break down a few high-impact scenarios.
Carried Interest: Why do Fund Managers Pay More?
Carried interest is a performance-related reward received by investment fund managers. For the 2025/26 tax year, qualifying carried interest is generally subject to Capital Gains Tax at 32%. From 6 April 2026, carried interest moves into a revised Income Tax regime. It is no longer subject to a separate CGT rate for the 2026/27 tax year.
Business Sales: Relief Opportunities for Business Owners
A qualifying disposal of all or part of a business, or qualifying shares in a trading company, may be eligible for Business Asset Disposal Relief.
For disposals made on or after 6 April 2026, qualifying gains within the £1 million lifetime limit are taxed at 18%. The eligibility conditions depend on the type of business asset being disposed of and are explained in more detail later in this guide.
Asset Types: Property, Shares, Crypto
When it comes to CGT, what you sell matters:
- Gains from shares and other investments are generally taxed at 18% to the extent that they fall within the unused basic-rate band and 24% above it. These rates increased from 10% and 20% for disposals made on or after 30 October 2024.
- Taxable residential property gains are generally charged at 18% or 24%, depending on the individual’s taxable income and gains. Full or partial Private Residence Relief may apply where the property was the owner’s only or main residence for some or all of the ownership period.
- Cryptoassets, though digital, are treated like personal property and taxed at the same gains tax rates and allowances as traditional assets
The key takeaway? Your rate of capital gains and eligibility for reliefs depend not just on the amount you’ve gained, but also on how you made it and what you’re selling.
What are the Capital Gains Tax Rates in the UK?
The rate of tax liability on asset profits you pay depends on your taxpayer category, as HMRC applies different rates and rules based on your legal status, whether you are an individual, trustee, or personal representative, which determines how you hold or control the asset and the capacity in which you make the gain.
What are the CGT Rates for Individuals in the UK?
You are classified as an individual taxpayer if you own and dispose of assets in your personal capacity, rather than through a trust or on behalf of an estate. As an individual, your tax on asset profit rate is linked to your income tax band and the type of asset you sell.
The CGT rates applicable to individuals are:
- Most individual gains, including gains from shares, investments and business assets, are generally taxed at 18% to the extent that they fall within the unused basic-rate band and 24% above it. These rates apply to disposals made on or after 30 October 2024. Separate rules apply to qualifying BADR gains and carried interest.
- Taxable residential property gains are generally charged at 18% to the extent that they fall within the individual’s unused basic-rate band and 24% above it. Full or partial Private Residence Relief may apply where the property was the owner’s only or main residence for some or all of the ownership period.
What are the CGT Rates for Trustees in the UK?
A trustee is an individual or organisation that manages assets on behalf of someone else, known as the beneficiary. The assets belong to the trust, not the trustee personally, which means CGT is charged to the trust rather than to the people running it.
- The CGT rate generally applicable to trustees is 24% for disposals made on or after 30 October 2024.
- Most trusts receive an Annual Exempt Amount of £1,500 for 2025/26 and 2026/27.
- Different allowance rules can apply to qualifying trusts for vulnerable beneficiaries.
What are the CGT Rates for Personal Representatives in the UK?
A personal representative is the executor or administrator responsible for managing the estate of a deceased person. If assets are disposed of during the administration period, any chargeable gain is generally taxable on the estate rather than directly on the beneficiaries.
The CGT rate generally applicable to personal representatives is 24% for disposals made on or after 30 October 2024.
Personal representatives can normally use the full Annual Exempt Amount for:
- The part of the tax year from the date of death to the following 5 April
- The following two tax years
No Annual Exempt Amount is normally available to the personal representatives for later tax years where the administration period continues.
Carried interest was subject to separate 32% CGT treatment in 2025/26. From 6 April 2026, carried interest falls within the revised Income Tax regime rather than the normal CGT rules.
What is the Capital Gains Tax Rate for Business Asset Disposal Relief?
Business Asset Disposal Relief is a single CGT relief that applies to certain qualifying disposals of businesses, business assets and shares in trading companies.
The BADR rate is 18% for qualifying disposals made on or after 6 April 2026. The relief applies to qualifying gains within a £1 million lifetime limit.
The previous BADR rates were:
- 14% for qualifying disposals made between 6 April 2025 and 5 April 2026
- 10% for qualifying disposals made on or before 5 April 2025
The eligibility requirements depend on what you dispose of.
- If you dispose of all or part of a business, you must generally have operated as a sole trader or business partner and owned the business for at least two years before the disposal.
- If you dispose of non-EMI shares, you must generally have been an employee or office holder of the company for at least two years. During that period, you must also normally have held at least 5% of the ordinary share capital and voting rights and met the relevant economic-entitlement requirement.
Different eligibility conditions apply to shares acquired through an Enterprise Management Incentive scheme.
Do I Lose my CGT Allowance if I Don’t Use it?
Yes. The Annual Exempt Amount applies only to gains arising in the relevant UK tax year. Any unused amount expires at the end of that tax year and cannot be carried forward.
The allowance may remain fully or partly unused where you make no chargeable disposals or where your overall net gains, after current-year allowable losses and relevant reliefs, do not exceed the Annual Exempt Amount.
Allowable losses arising in the same tax year must generally be deducted from chargeable gains, even where this reduces the remaining gains below the Annual Exempt Amount. Losses carried forward from previous tax years are treated differently and are generally used only where the remaining gains exceed the Annual Exempt Amount.
What’s the Difference Between Unused Allowances and Carried-forward Losses?
Your CGT allowance and your capital losses are treated very differently by HMRC.
- Unused allowance: The Annual Exempt Amount is £3,000 for individuals in both 2025/26 and 2026/27. If you do not use it against gains arising in the relevant tax year, the unused amount expires at the end of that year. It cannot be carried forward or applied to gains made in a later tax year.
- Carried-forward losses: Qualifying unused allowable losses can normally be carried forward indefinitely, provided they are reported to HMRC within four years after the end of the tax year in which they arose. They are generally used only where net gains exceed the Annual Exempt Amount and only as far as necessary to reduce the gains to that amount. Any remaining eligible losses can continue to be carried forward.
Suppose you made a £2,000 allowable loss from selling shares in 2025/26 and had no chargeable gains against which to use it. After reporting the loss to HMRC, you can normally carry it forward.
If you then make a £6,000 chargeable gain in 2026/27, you can deduct the £2,000 carried-forward loss, leaving a £4,000 net gain. After applying the £3,000 Annual Exempt Amount, £1,000 remains chargeable to CGT.
Frequently Asked Questions on Capital Gains Tax and Allowance
What happens if I miss the CGT reporting deadline?
If CGT is due on a UK residential property disposal, you must normally report the gain and pay the tax through a Capital Gains Tax on UK property account within 60 days of completion. HMRC may charge late-filing penalties and interest if the report or payment is late. If you are also registered for Self Assessment, you must normally include the disposal in your tax return. Reporting the gain through Self Assessment does not replace the separate 60-day property deadline.
Is CGT different from income tax?
Yes. Tax on gains applies to profits from the sale of assets, such as property, shares, or cryptocurrency. Income tax rates apply to earnings such as wages, pensions, and dividends. CGT has separate tax bands, allowances, and reporting rules from income tax, even though both are part of your overall tax profile.
Do I have to pay CGT when I sell my primary home?
You typically won’t pay tax on profits from selling your main home due to Private Residence Relief. However, partial CGT may apply if any part of the property was used for business, rented out, or not your primary residence throughout the ownership period.
Can I reduce my tax if I sell UK land or property abroad?
UK residents must report gains on overseas land or property and may owe UK asset profit tax. However, you can often claim a Foreign Tax Credit to offset tax already paid abroad, reducing your UK liability under double taxation agreements.
Do I pay Capital Gains Tax on property I inherited?
You do not normally pay Capital Gains Tax when you inherit a property. If you later sell it, CGT may be due on the increase in value between its market value at the date of death and the sale value, after deducting allowable costs, losses and reliefs. Inheritance Tax is considered separately as part of the deceased person’s estate. Private Residence Relief may reduce the gain where the inherited property later qualifies as your only or main home.
Who can claim BADR to lower their Capital Gains Tax bill?
BADR is available to sole traders, business partners, and company shareholders who have owned and actively worked in a qualifying trading business for at least two years. Shareholders must own at least 5% of shares and be company employees or directors. The relief applies to lifetime gains up to £1 million.
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