Capital Gains Tax (CGT) allowance and rates: What you need to know
This guide will explain the key points of CGT allowances and rates, and how to calculate and report your capital gains on your Self-Assessment tax return.
What you'll learn in this guide...
- Everything you need to know about Capital Gains Tax rates and allowances
- How the changes for the current tax year (2026/27) will affect your upcoming report
- How to make the most out of your Capital Gains Tax allowance
Jump to...
- Introduction to Capital Gains Tax
- Capital Gains Tax rates in 2026/27
- The current CGT allowance
- Changes to Capital Gains Tax allowance for 2026/27
- How to work out your Capital Gains Tax bill
- What assets don’t you have to pay CGT on?
- When does CGT not apply?
- Make the most of your CGT allowance
- Capital Gains Tax FAQs
Introduction to Capital Gains Tax
Capital Gains Tax (CGT) applies when you make a profit, or 'gain', from selling, gifting, or disposing of an asset that has increased in value since you bought or inherited it. You're taxed only on the profit, not the total amount you sold the asset for.
Understanding Capital Gains Tax can feel overwhelming. But it's essential to know how CGT works and what it means for your personal finances, particularly with the recent changes to the allowance.
Whether you're paying Capital Gains Tax for the first time or are unsure about when you need to pay it, understanding the latest rates and thresholds will help you determine how CGT applies to you.
Capital Gains Tax rates in 2026/27
It's important to clarify that the Capital Gains Tax (CGT) rate differs from income tax rates. While your taxable income does influence your CGT rate, the tax brackets for CGT are different, and you'll need to calculate your taxable gains to check which CGT rate applies to you.
Your CGT rate depends on two main factors: the asset type and your taxable income. We’ll go into more detail on specific asset types later in this guide, but for now, assets can generally be divided into two categories: property and other assets.
Tax band | Taxable income | CGT Rate on residential property gains | CGT rate on other gains |
|---|---|---|---|
Basic Rate | £12,571 to £50,270 | 18% | 10% (until 30 Oct 2024) / 18% (from 30 Oct 2024 onwards) |
Higher or Additional Rate | £50,271 and over | 24% | 20% (until 30 Oct 2024) / 24% (from 30 Oct 2024 onwards) |
For other assets (such as shares), the tax rate differs depending on when you made the gain. Before 30 October 2024, gains were charged at 10% for basic rate taxpayers and 20% for higher-rate taxpayers. However, following the Autumn Budget 2024, these rates changed to 18% for basic-rate taxpayers and 24% for higher-rate taxpayers.
As there are only two CGT brackets, working out your Capital Gains Tax rate is relatively straightforward if your taxable income is above £50,271.
Find out more about CGT on property here.
Capital Gains Tax (CGT) rates and bands 2019/20 to 2026/27
Tax year/period | Basic rate taxpayer - other assets | Basic rate taxpayer - residential property | Higher and additional rate - other assets | Higher and additional rate - residential property |
|---|---|---|---|---|
| 6 April 2026 - 5 April 2027 | 18% | 18% | 24% | 24% |
| 6 April 2025 - 5 April 2026 | 18% | 18% | 24% | 24% |
30 October 2024 - 5 April 2025 | 18% | 18% | 24% | 24% |
| 6 April 2024 - 29 October 2024 | 10% | 10% | 10% | 24% |
2023-24 | 10% | 18% | 20% | 28% |
2020-23 | 10% | 18% | 20% | 28% |
2019/20 | 10% | 18% | 20% | 28% |
Higher and additional rate taxpayers
If your taxable income is above £50,271, and you pay a tax rate of 40%, or you are an additional rate taxpayer (45%), you’re in this bracket. Capital Gains Tax for higher rate taxpayers is as follows:
- For property - you pay 24% on gains.
- For other chargeable assets - you pay 24% on gains made on or after 30 October, 2024.
For basic rate taxpayers, gains may push your total taxable income into the higher tax bracket, which could affect the rate at which you pay CGT.
Basic rate taxpayers
If your taxable income is between £12,571 and £50,270, and you pay an income tax rate of 20%, you’re in this bracket. To determine your Capital Gains Tax (CGT) rates as a basic rate taxpayer, follow these steps:
- Establish your taxable income. Remember to consider your Personal Allowance (earnings up to £12,570) and any other tax relief you’re entitled to.
- Work out the total gains for each asset you’ve sold, taking any losses into account if applicable.
- Deduct the tax-free allowance (currently £3,000) from the total gains to find your taxable profits.
- Add your taxable income and gains to find your total taxable amount for the tax year.
- If this final amount falls within the basic income tax band, you’ll pay 18% on gains from residential property and other chargeable assets disposed of between 30 October 2024 and 5 April 2025. If part of this amount exceeds the basic rate, only the amount over the basic income tax band will be taxed at the higher rate, 24% for residential property and 24% for all other gains.
Disclaimer: the calculation guidance is for informational purposes only and should not be construed as tax advice. Before reporting capital gains to HMRC, please seek independent financial advice on your specific circumstances.
The current CGT allowance
The good news is, individuals are entitled to a Capital Gains Tax allowance each tax year, which allows you to keep a certain amount of gains tax-free without paying any tax on it.
For the current tax year (2026/27), the CGT allowance is £3,000. So, no matter how much your gains are, up to £3,000 of it is tax-exempt and yours to enjoy as pure profit. CGT is only applicable to gains exceeding £3,000, and you’ll be liable to pay tax on gains when it exceeds this amount.
Changes to Capital Gains Tax allowance for 2026/27
The Capital Gains Tax allowance has been gradually reduced over the last few years. For the tax year 22/23, the CGT allowance was £12,300 before being cut to £6,000 in 23/24. In 2024/25, it was lowered further to £3,000. Increased CGT rates can affect investment decisions, as you may decide to hold onto the asset, rather than realise further gains – in other words, sell it and pay tax on the profit.
Given the continued cuts to the CGT allowance, now may be a good time to consider setting up an ISA or SIPP to maximise your tax-free allowance. Investments held within these accounts are ‘tax-wrapped' and protected from both income and Capital Gains Tax, meaning there is no CGT applicable to a disposal of assets in these accounts.
How to work out your Capital Gains Tax bill
Reporting capital gains can feel overwhelming, especially if it's your first time. It's worth consulting a professional to ensure your report is as accurate as possible. If you’re self-employed or have additional income from self-employment, property, or capital gains, you need to fill out supplementary pages within the Self-Assessment form. You can access detailed Self-Assessment help sheets on CGT to guide you through the reporting process.
Your total CGT bill can be affected by several factors: the losses you declare, your UK residency status, and the type of asset you’re selling.
1. Calculate your gain
- Work out your gains on any assets you’ve sold or transferred: this is the price you sold it for, minus the cost you initially paid for it, considering allowable deductions or losses such as original value and costs associated with the sale.
2. Determine your annual income before tax
- How much your annual income before tax is will decide your tax bracket. You will need to add your taxable income to your taxable gains
3. Apply the CGT allowance (£3,000)
- The CGT allowance is £3,000, therefore deduct this from your original gain before working out the final CGT sum.
The most complex asset to declare is residential property. Luckily, the official UK government website has a property Capital Gains Tax calculator, which helps you work out your gains with simplicity.
For other assets, you can find several online calculators to estimate your CGT. But remember, these figures are not final. Once you’ve worked with a financial professional, you can report and pay your CGT for both property and other assets through HMRC’s real-time Capital Gains Tax service.
Example scenario - Toni's Capital Gains Tax calculation for 2026/27:
Toni has invested £50,000 in shares over the years and recently sold them for £75,000, making a capital gain of £25,000. She’s never paid capital gains tax before, and must work out how much of this gain she should pay tax on, and at what tax rate to find her total amount due.
- Firstly, Toni establishes her taxable income. She earns £35,000 per year as a full-time university administrator, placing her in the basic-rate taxpayer bracket.
The annual exempt amount for the 2026/27 tax year is £3,000, so Toni only needs to consider the tax implications of £22,000 of her original gain (£25,000 - £3,000 = £22,000).
- Toni adds her taxable income (£35,000) to her taxable gains (£22,000), giving her a total taxable amount of £57,000.
Determine how much gain falls into each tax rate:
Basic Rate CGT:
- The basic-rate tax band for 2026/27 applies to income above the personal allowance of £12,570 up to £50,270. Since Toni’s salary is £35,000, she has £15,270 of room remaining in the basic-rate band for her capital gains (this is £50,270 - £35,000).
- Based on the taxable amount, Toni will need to pay a 18% tax rate on £15,270 of the capital gain, as this amount is still within the basic taxpayer bracket. Her basic rate tax amount to pay on her gains is £2,748.60 (£15,270 x 18%).
Higher rate CGT:
- The remaining portion of her capital gain, £6,730, falls into the higher-rate band, which applies to income above £50,270.
- 24% tax rate is applied to this part of the gain. Toni will therefore need to pay £1,615.20 on this portion of her gain
Total Capital Gains Tax due:
£2,748.60 (basic-rate tax) + £1,615.20 (higher-rate tax) = £4,363.80
Final breakdown:
Toni’s total CGT bill for the 2026/27 tax year would be £4,363.80.
Note: this example is to illustrate a simple example of capital gains tax. It assumes Toni is a UK resident living in England or Wales. It does not consider any losses or other tax relief. Please seek independent financial advice before submitting your capital gains tax report to HMRC to ensure your specific circumstances are taken into account.
What assets don’t you have to pay CGT on?
CGT may apply when you sell, gift, or get rid of an asset. Regardless of how an asset leaves your possession, you’ll see this referred to as ‘disposing’ of an asset - even if parting ways with it leaves you with a happy wallet.
As a rule, only ‘chargeable’ assets are subject to capital gains tax, which refers to assets such as personal possessions over the value of £3,000, residential property you don’t live in, cryptocurrencies and some shares. There are some exceptions and special circumstances to consider for different assets.
The table below covers the main types of assets:
Asset type | When CGT applies | Exceptions |
|---|---|---|
Property | When the property is not your main residence, such as holiday homes or rentals | CGT may apply when selling your main residence if you run a business from it, let out rooms, or if it’s a particularly large amount of land (just over an acre or larger) |
Shares | When shares are not held in a ‘tax wrapped’ account | Shares held in an account such as an ISA or SIPP, or another investment scheme, are sheltered from tax |
Personal property worth over £3,000 | Jewellery, paintings, antiques, household furniture et | You do not need to calculate any gain on the disposal of a personal possession if the disposal proceeds did not exceed £6,000. |
Business assets | When selling land, buildings, shares, physical equipment, trademarks, and other parts of a business asset | You will not usually need to pay Capital Gains Tax on gifts to:
|
Cryptocurrency or bitcoin | When gains exceed the current allowance of £3,000 | You will not usually need to pay Capital Gains Tax on:
|
When does CGT not apply?
There are some asset-specific exceptions you may need to consider, but in most circumstances, CGT doesn’t need to be paid for the following:
Assets gifted or sold to husbands, wives, or civil partners are exempt from CGT. With two exceptions:
- You haven’t lived together in the tax year at all.
- Assets were given to your spouse’s business to sell on and make a profit from.
Assets gifted to charities. With one exception:
- If you sell the asset to the charity for more than it cost you to buy originally, but less than its current market value. You can figure out your gain by using the amount paid to you by charity, as opposed to the actual value of the asset.
Inherited assets. With one exception:
- CGT is not automatically applied when the asset is transferred to the beneficiary, but upon the eventual sale/disposal of it.
Assets with a lifespan of less than 50 years:
- You don’t need to pay CGT on ‘wasting assets’, which are assets with a lifespan of less than 50 years. This includes mechanical devices like watches, vintage cars, and clocks.
ISA and SIPP
- Self-Invested Personal Pensions (SIPPs) and Individual Savings Accounts are tax efficient wrappers – therefore no CGT will be liable for assets disposed within these accounts. This also applies to their child equivalents, Junior ISA and Junior SIPP.
Government Gilts
- You don’t need to pay CGT on gains made from government gilts. Learn more about gilts.
If you aren’t sure if you need to report and pay capital gains for any of your recent asset disposals, the official UK government website offers further details on what you need to pay CGT on.
Make the most of your CGT allowance
While the Capital Gains Tax allowance continues to reduce, you can take careful and legitimate financial planning steps to keep more of what you earn. There are several ways to reduce Capital Gains Tax when planning for the tax year end, such as increasing pension contributions, making charitable donations, and building investments within an ISA or SIPP account.
As your money grows within an ISA (Individual Savings Account) or SIPP (Self-Invested Personal Pension), you will pay no income tax, CGT, or dividend tax - yes, really! This means you get to keep more of your hard-earned wealth.
If you’re new to investing or looking for ways to shelter future investment plans from further cuts to allowances, choosing one of our ‘tax wrapped’ investment accounts opens up opportunities to build a tax-free portfolio and maximise your savings.
The value of your investments may go down as well as up. You may not get back all the money that you invest. If you are unsure about the suitability of an investment product or service, you should seek advice from an authorised financial advisor.
Capital Gains Tax FAQs
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