Capital Gains Tax (CGT) in the UK has seen significant changes in recent years — the annual exempt amount fell sharply from £12,300 (2022-23) to just £3,000 (2024-25 onwards), while CGT rates on property rose to 18% and 24% from April 2024. For investors and property owners, understanding the current rules is more important than ever.
UK CGT Rates 2025-26
| Asset Type | Basic Rate Taxpayer | Higher/Additional Rate |
|---|---|---|
| Residential property | 18% | 24% |
| Shares, funds & other assets | 10% | 20% |
| Business assets (BADR) | 10% (up to lifetime limit) | |
Annual CGT exempt amount: £3,000 (2025-26). Gains below this are tax-free.
How the Rate is Determined
The CGT rate depends on your income — specifically, whether the gain (added to your other income) falls within the basic rate band or above it:
- Add the net capital gain (after the £3,000 exemption) to your taxable income.
- If the total stays within the basic rate band (up to £50,270), you pay 10% on shares or 18% on property.
- If the gain pushes you above £50,270, the portion above pays 20% (shares) or 24% (property).
Annual Exempt Amount: Use It or Lose It
The £3,000 annual CGT exempt amount cannot be carried forward. Any unused allowance is lost at the end of the tax year. Strategies to make use of it:
- Crystallise gains of up to £3,000 annually from a portfolio even if you're not selling long-term holdings.
- Use "Bed and ISA" — sell shares to realise gains up to the exemption, then rebuy inside an ISA. Future gains inside the ISA are CGT-free forever.
- Transfer assets to a spouse or civil partner (no CGT between spouses at market value). Doubles your combined exemption and potentially lowers the CGT rate if one partner is a basic rate taxpayer.
Worked Example — Selling Shares (Higher Rate Taxpayer)
Salary: £60,000 (higher rate taxpayer)
Shares sold at: £18,000 (bought for £5,000)
Gain: £13,000
Less Annual Exemption: £13,000 − £3,000 = £10,000 taxable gain
CGT at 20% (higher rate, shares): £10,000 × 20% = £2,000
Note: If the taxpayer's salary were £45,000 instead, the first £5,270 of the gain might fall within the basic rate band (at 10%), saving £530 in tax.
Worked Example — Selling Rental Property
Purchase price (2015): £200,000
Sale price (2025): £320,000
Allowable costs (legal fees, improvements): £15,000
Net Gain: £320,000 − £200,000 − £15,000 = £105,000
Less Annual Exemption: £105,000 − £3,000 = £102,000
CGT (higher rate on property, 24%): £102,000 × 24% = £24,480
Due within 60 days of completion for UK residents selling residential property (earlier 30-day rule extended to 60 days).
Principal Private Residence (PPR) Relief
If you sell your main home, PPR relief usually means no CGT at all. The gain is exempt for periods you lived in the property as your main residence, plus the last 9 months of ownership (even if you weren't living there). If you rented out your home for part of the period, only the rental period is potentially taxable — the rest is covered by PPR.
ISA: The CGT-Free Wrapper
Gains and income inside a Stocks & Shares ISA are completely free of CGT — forever. The annual ISA allowance is £20,000 (2025-26). Once money is inside an ISA and investments grow, selling them generates no CGT bill regardless of the gain size. Maximising ISA contributions over time is one of the most powerful tax-planning tools available to UK individuals.
Business Asset Disposal Relief (BADR)
Formerly Entrepreneurs' Relief, BADR taxes qualifying business disposals at 10%, up to a lifetime limit of £1 million (reduced from £10 million in 2020). To qualify: you must have held at least 5% of the company's shares, been an officer or employee, for at least 2 years. From April 2025, the BADR rate increases to 14%; from April 2026, it rises to 18% — so timing disposals before April 2025 may have been advantageous for some.
Calculate your UK CGT
Open Capital Gains Calculator →Source: HMRC, gov.uk. Tax Year 2025-26. Not financial advice.