Capital Gains Tax UK 2025/26: Rates, Allowances and How to Pay Less

From 6 April 2025, Capital Gains Tax rates were simplified and increased. The old distinction between property gains and non-property gains has been narrowed — all chargeable assets now attract the same rates:

• Basic rate taxpayers: 18% on all gains (residential property and other assets)
• Higher and additional rate taxpayers: 24% on all gains
• Carried interest (fund managers): 32%
• Business Asset Disposal Relief: 14% (up from 10%)
• Trustees and personal representatives: 24% on all gains

The annual exempt amount remains £3,000 per person (£1,500 for trusts).

The rate increase on non-property assets is significant. Previously, a basic rate taxpayer selling shares paid just 10% — now they pay 18%, an 80% increase in the rate itself. For higher rate taxpayers, the jump from 20% to 24% adds £4,000 of tax on every £100,000 of gains.

Your CGT rate depends on your total taxable income plus the gain. The basic rate band for 2025/26 is £37,700 (income up to £50,270 including the £12,570 personal allowance). If adding the gain to your taxable income pushes you above this threshold, the portion above is taxed at 24%. A basic rate taxpayer with £20,000 taxable income and a £12,600 gain (£9,600 after the £3,000 exemption) would pay 18% on the full £9,600 — that's £1,728 in CGT.

CGT is charged on the gain, not the sale price. The formula:

Sale proceeds − Purchase price − Allowable costs − Annual exempt amount = Taxable gain

Allowable costs include stamp duty on purchase, solicitor and estate agent fees, and improvement costs (a new kitchen counts; repainting does not). For shares, you deduct dealing charges and the original purchase cost.

Consider a buy-to-let flat bought for £200,000 in 2015, sold for £300,000 in March 2026. Costs: £1,500 stamp duty, £3,000 combined legal fees, £15,000 for a kitchen and bathroom refit. The calculation:

£300,000 − £200,000 − £19,500 = £80,500 gain £80,500 − £3,000 exempt amount = £77,500 taxable

A higher rate taxpayer pays 24%: £18,600. Under the old £12,300 allowance, the taxable gain would have been £68,200, producing a bill of £16,368 — the allowance cut alone adds £2,232.

For shares, HMRC uses the Section 104 holding rule: if you bought shares in the same company at different times, your cost basis is the weighted average of all purchases. The 30-day 'bed and breakfasting' rule means selling and rebuying the same shares within 30 days matches the repurchase to the sale — the gain or loss is deferred. This matters for Bed and ISA strategies.

Private Residence Relief: Your main home is completely exempt from CGT. If you lived in it for part of ownership before letting it out, you get proportional relief plus the final 9 months are always exempt.

Lettings Relief: Up to £40,000 — but only if you were in shared occupation with the tenant. Since April 2020, this relief is almost impossible to claim unless you actually lived alongside your lodger.

Business Asset Disposal Relief: The reduced rate for qualifying business disposals is now 14% (up from 10%) on gains up to a £1 million lifetime limit. You must have held qualifying status for at least two years. This covers sales of your trading business, shares in your personal trading company (5%+ holding), or partnership interests.

Investors' Relief: 10% rate on gains from unlisted trading company shares up to £10 million lifetime. Shares must be held for 3+ years and issued after 17 March 2016. Unlike BADR, you don't need to be an employee.

ISAs and pensions: Gains within ISA wrappers or pension schemes are completely exempt — no CGT, no reporting, no limits on the gain. This is why the £20,000 annual ISA allowance is one of the most powerful tools in UK tax planning.

Gifts to charity: Disposed of at nil gain/nil loss — no CGT. Gift Aid rules are separate.

Spousal transfers: Transfers between married couples and civil partners are CGT-free. This is the foundation of several planning strategies covered below.

UK residential property: You must report and pay within 60 days of completion through HMRC's CGT reporting service. Miss the deadline and HMRC charges a £100 late filing penalty immediately, with escalating penalties at 6 and 12 months. Interest runs from day 61.

This catches people out regularly. You complete a property sale, the conveyancer transfers the proceeds, and you forget that HMRC expects a CGT return within 60 days — even if you normally file self-assessment. The 60-day clock runs from the date of completion, not exchange.

All other assets (shares, funds, personal possessions, business assets): Report on your self-assessment return by 31 January 2027 for 2025/26 gains. If you don't normally file self-assessment, register with HMRC by 5 October 2026.

Losses: Report within four years of the end of the tax year in which they occurred. Unused capital losses carry forward indefinitely — but only if reported. A loss you don't report is a loss you can't use. For 2025/26 losses, the deadline is 5 April 2030.

With the exempt amount at £3,000 and rates at 18%/24%, planning is no longer optional for anyone with investments outside a wrapper.

1. Bed and ISA — Sell investments in a taxable account, rebuy immediately within your ISA. This crystallises the gain (ideally within your £3,000 exemption) and shelters all future growth from CGT permanently. The 30-day bed and breakfasting rule does not apply to ISA transfers — you can sell and rebuy the same day. With 4 days until April 5, you can use the last of your 2025/26 ISA allowance for this.

2. Use both spouses' allowances — Each person gets £3,000. Transfer assets between spouses (CGT-free), then each crystallises gains within their own exemption. Household allowance: £6,000. On a £50,000 gain at 24%, that's £1,440 saved versus using one allowance.

3. Split disposals across tax years — Sell part of a holding before 5 April, the rest after. Two annual exemptions (£6,000 total) instead of one. At 24%, that's an extra £720 saved. Four days left to execute this for 2025/26.

4. Harvest losses — Investments sitting at a loss? Sell before April 5 to crystallise the loss, which offsets gains in the same year or carries forward. Check your portfolio — you'd be surprised how many holdings are underwater after the Iran-war volatility.

5. Pension contributions to lower your rate — A large pension contribution reduces your taxable income. If that pushes you from the higher rate band into the basic rate band, your CGT rate drops from 24% to 18%. On a £50,000 gain, that's a £3,000 saving. See our pension guide for the mechanics.

6. Gift to spouse before selling — If one spouse is a basic rate taxpayer, transfer the asset to them (CGT-free) and let them sell it at 18% instead of 24%. On a £100,000 gain, that saves £6,000.

7. Hold until death — The CGT uplift on death wipes out all unrealised gains. Beneficiaries inherit at market value with no CGT to pay (though Inheritance Tax may apply). For older investors with large unrealised gains, this can save tens of thousands.

The government has not announced any changes to CGT rates or allowances for 2026/27 in the Spring Statement. The £3,000 annual exempt amount is expected to remain frozen — there is no mechanism for it to rise automatically with inflation since the Autumn Statement 2022 scrapped the indexation.

The BADR rate is legislated to rise to 18% from 6 April 2026, aligning it with the main basic rate. Business owners planning a disposal should strongly consider completing before April 5 to lock in the 14% rate — on a £1 million qualifying gain, the difference between 14% and 18% is £40,000.

For investors, the key action is structural: move as much as possible into ISA and pension wrappers where gains are exempt. The combination of higher rates and a frozen £3,000 allowance means the annual tax-free shelter has shrunk from £2,460 of saved tax (£12,300 × 20%) to just £720 (£3,000 × 24%). Every pound of gains outside a wrapper is now expensive.

This article is for informational purposes only and does not constitute financial advice. You should seek independent financial advice before making any investment decisions.