Capital Gains Tax Guide UK 2026/27: Rates, Allowances & Planning
Everything you need to know about Capital Gains Tax in the UK, including current rates, annual allowances, exemptions, and proven strategies to minimize your CGT liability legally.
What is Capital Gains Tax?
Capital Gains Tax (CGT) is a tax on the profit when you sell (or 'dispose of') an asset that has increased in value. You pay tax on the gain, not the total amount you receive. CGT applies to assets like property (excluding your main home), shares, business assets, and valuable possessions worth over £6,000.
CGT Rates for 2026/27 Tax Year
Capital Gains Tax rates depend on your total taxable income and the type of asset sold:
Most Assets
- 10% for basic rate taxpayers
- 20% for higher/additional rate taxpayers
- Applies to shares, business assets, cryptocurrencies, and other investments
Residential Property
- 18% for basic rate taxpayers
- 24% for higher/additional rate taxpayers
- Applies to second homes, buy-to-let, and inherited properties (not main residence)
Annual CGT Allowance 2026/27
The Capital Gains Tax annual exempt amount (tax-free allowance) for the 2026/27 tax year is:
£3,000
per individual per tax year
This means you can make gains up to £3,000 before paying any CGT. Any gains above this threshold are taxable. Note: This is significantly reduced from £6,000 in 2024/25 and £12,300 in previous years.
Assets Subject to CGT
Capital Gains Tax typically applies to gains from selling or disposing of:
Property (excluding main home)
Second homes, buy-to-let properties, business premises, inherited property
Shares & Investments
Stocks, bonds, unit trusts, non-ISA investments (ISA gains are tax-free)
Business Assets
Business premises, goodwill, business equipment sold outside normal trading
Personal Possessions
Antiques, jewelry, artwork worth over £6,000 (cars are usually exempt)
Cryptocurrencies
Bitcoin, Ethereum, and other digital currencies when sold or exchanged
CGT Exemptions & Reliefs
Several valuable exemptions and reliefs can significantly reduce your CGT liability:
Private Residence Relief
Your main home is usually exempt from CGT when you sell it, provided it has been your only residence throughout ownership. Final 9 months of ownership also qualify even if you've moved out.
Important: Partial relief available if the property was partly rented out or used for business.
Business Asset Disposal Relief (BADR)
Formerly known as Entrepreneurs' Relief. Reduces CGT to 10% on qualifying business disposals up to a lifetime limit of £1 million. Applies when selling a business, shares in your own company, or business assets.
Conditions: Must have owned the business/shares for at least 1 year and been actively involved.
Investors' Relief
10% CGT rate on disposal of qualifying unlisted trading company shares, up to £10 million lifetime limit. Shares must have been newly issued, held for at least 3 years, and represent less than 30% ownership.
ISA & Pension Exemption
No CGT on gains made within ISAs or pensions, making them highly tax-efficient investment vehicles. Use your £20,000 annual ISA allowance wisely.
Calculating Your Capital Gain
The basic calculation is:
Sale price of asset
− Original purchase price
− Allowable costs (legal fees, improvement costs)
− CGT annual allowance (£3,000)
= Taxable capital gain
Then apply the appropriate CGT rate based on your income tax band and asset type.
CGT Tax Planning Strategies
Strategic planning can significantly reduce your CGT liability legally:
Use Your Annual Allowance
Utilize the annual exempt amount each tax year (£3,000 for 2026/27). Consider spreading large gains over multiple years to maximize allowances.
Transfer Assets to Spouse
Transfers between spouses/civil partners are CGT-free. This allows both to use their annual allowances and potentially benefit from lower tax rates.
Time Your Disposals
Consider timing asset sales in years when your income is lower, potentially benefiting from the lower 10% or 18% CGT rates instead of 20% or 24%.
Offset Losses Against Gains
Capital losses can be offset against gains in the same tax year or carried forward indefinitely. Keep records of all losses to reduce future CGT bills.
Invest Through ISAs
Maximize your £20,000 annual ISA allowance. All gains and income within ISAs are completely tax-free, making them highly efficient for long-term growth.
Claim All Reliefs
Don't miss out on Business Asset Disposal Relief, Investors' Relief, or other qualifying exemptions that can dramatically reduce your CGT rate.
Reporting & Payment Deadlines
Important: Property Sales Reporting
If you sell UK residential property, you must report and pay CGT within 60 days of completion using the UK Property Disposal Return. This applies even if you have no tax to pay.
For other assets, report capital gains on your Self Assessment tax return by 31st January following the tax year of disposal.
Late reporting or payment incurs automatic penalties and interest charges.