Capital Gains Tax (CGT) is a tax on the profit you make when you sell or dispose of an asset that has increased in value. It is important to understand that CGT is charged on the gain · not the total proceeds of the sale. If you bought shares for £10,000 and sold them for £16,000, only the £6,000 gain is potentially taxable.
A disposal does not have to be a sale. Giving an asset away as a gift, transferring it to someone else, or exchanging it for something else can all count as a disposal for CGT purposes. The tax applies to individuals, trustees, and personal representatives of deceased estates. Companies pay Corporation Tax on their gains rather than CGT.
CGT is separate from Income Tax. Your gains are added on top of your taxable income to determine which rate applies, but the gain itself is not treated as income for most purposes. You can use our Capital Gains Tax calculator to estimate your liability quickly.
The rate of CGT you pay depends on the type of asset you are selling and your overall income level in the tax year. There are three main rate bands for 2026/27:
To determine which rate applies, add your taxable gains to your total income for the year. Any portion of the gain that falls within the basic-rate band (up to £50,270 for 2026/27) is taxed at the lower rate. Gains above that threshold are taxed at the higher rate. This means a basic-rate taxpayer with a large gain may pay both 10% and 20% on different portions of the same disposal.
Investors' Relief applies a 14% rate on gains from unlisted trading company shares held for at least three years, subject to a separate £1 million lifetime limit.
Every individual has an Annual Exempt Amount (AEA) · sometimes called the CGT allowance · which shields a portion of your gains from tax each year. For 2026/27 the AEA is £3,000.
This represents a dramatic reduction from previous years. The allowance was £12,300 in 2022/23, was cut to £6,000 in 2023/24, and fell again to £3,000 in 2024/25 where it has remained. The reduction means many more people now have a CGT liability where previously they did not.
The AEA cannot be carried forward to future tax years · use it or lose it. It also cannot be transferred to a spouse or civil partner, although each partner has their own separate allowance. Trustees of most discretionary trusts have an AEA of £1,500 in 2026/27.
Only gains above the annual exempt amount are taxed. If your net gains for the year are £3,000 or less, you will have no CGT bill · though you may still need to report the disposal to HMRC depending on the proceeds amount.
Enter your gain, income and asset type to see your CGT bill for 2026/27 in seconds.
Open CGT CalculatorCGT applies to a wide range of assets. The most common categories that UK taxpayers encounter include:
Some assets are specifically exempt from CGT. These include your main home (subject to Private Residence Relief), ISA and pension fund investments, UK government gilts, Premium Bonds, lottery and betting winnings, and personal cars.
Private Residence Relief (PRR) · often called main residence relief · is one of the most valuable CGT exemptions available. If a property has been your only or main residence throughout the entire period of ownership, the gain is fully exempt from CGT.
Where a property has not been your home for the entire period · for example if you rented it out for a period, or it was a second home · only the proportion of the gain relating to the period of residence is exempt. The final nine months of ownership always qualify for PRR regardless of whether you are still living there, to allow time to sell after moving out.
Letting Relief was significantly restricted from April 2020 and now only applies where the owner is in shared occupancy with a tenant. In practice this means Letting Relief is rarely available on a straightforward buy-to-let property.
If you own two properties, you can nominate which is your main residence for PRR purposes within two years of acquiring the second property. This election can be changed subsequently and is a useful planning tool for couples who each own property.
There are several legitimate strategies to reduce or defer your Capital Gains Tax liability:
Residential property disposals are subject to the higher CGT rates (18% and 24%) and have a separate, strict reporting and payment deadline. Since 27 October 2021, if you sell a UK residential property and a CGT liability arises, you must report the disposal and pay the tax within 60 days of completion.
This 60-day window replaced the original 30-day deadline that applied from April 2020. Even so, it is a tight timescale compared with the usual Self Assessment deadline of 31 January following the tax year. Failure to meet the deadline results in interest charges and penalties.
The 60-day rule applies even if you are not certain of the final tax figure. You must make a reasonable estimate and pay the estimated amount. An adjustment can then be made through Self Assessment later in the year.
You can calculate whether you have a CGT liability on a property sale using our CGT calculator. If the property was your main home for the entire period, PRR should eliminate the gain entirely and no reporting is required. You may also want to consider the Stamp Duty implications if you are reinvesting in another property, or model rental income tax with our rental income tax calculator.
Gains on shares held outside an ISA are subject to CGT at 10% or 20% depending on your income level. HMRC uses share pooling rules to calculate the cost of shares when you sell. All shares of the same class in the same company are pooled together, and an average cost per share is calculated. This average cost is used to compute the gain on any subsequent disposal.
The bed and breakfast rule prevents a simple tax avoidance strategy where you sell shares to crystallise a loss and immediately repurchase them. Under these rules, if you sell shares and buy the same shares back within 30 days, the repurchased shares are matched against the sale first · meaning the loss cannot be claimed. The same 30-day matching rule applies to gains as well as losses.
The bed and ISA strategy (selling shares and repurchasing inside an ISA) avoids the bed and breakfast rule because the shares inside the ISA are in a different wrapper and are treated as different assets. However, the ISA subscription must be funded with cash · you cannot transfer existing shares directly into an ISA.
Dividends from shares are subject to Dividend Tax · not CGT · and are calculated separately. Only the gain on disposal triggers a CGT liability.
| Purchase price (2014) | £180,000 |
| Sale price (2026) | £280,000 |
| Gross gain | £100,000 |
| Allowable costs (legal fees, improvements) | £5,000 |
| Net gain | £95,000 |
| Annual Exempt Amount 2026/27 | £3,000 |
| Taxable gain | £92,000 |
Basic-rate taxpayer (assuming sufficient basic-rate band remaining)
| CGT at 18% | £16,560 |
Higher-rate taxpayer
| CGT at 24% | £22,080 |
Allowable costs include legal fees on purchase and sale, estate agent fees, and capital improvements (not repairs). Use our CGT calculator for your own figures.
How and when you report CGT depends on the type of asset disposed of:
You must report disposals through Self Assessment if your total proceeds exceed four times the annual exempt amount (£12,000 in 2026/27), even if you have no tax to pay. You also need to report if your taxable gains exceed the AEA or if you made a loss that you wish to claim.
If you do not already file a Self Assessment return, you can register for one with HMRC. Penalties apply for late filing and late payment, and interest accrues on unpaid CGT from the due date.
CGT planning often intersects with Inheritance Tax planning, particularly for property and business owners. See our Inheritance Tax guide and IHT calculator for more detail on how these taxes interact.
Assets held in a Stocks and Shares ISA are permanently sheltered from CGT. See how much you could save over time.
Open ISA CalculatorIn most cases, no. Your main home is exempt from CGT under Private Residence Relief (PRR), provided it has been your only or main residence throughout the entire period of ownership. If you have let the property, used part of it exclusively for business, or it is very large (grounds over 0.5 hectares), only a proportion of the gain may be exempt. If you own two homes, you can nominate which qualifies as your main residence for PRR purposes, but this election must be made within two years of acquiring the second property.
Yes. Capital losses are offset against gains in the same tax year first · you cannot choose to carry them forward if you have gains in the current year. Once all current-year losses have been applied, any remaining losses can be carried forward indefinitely to offset against gains in future years. You must claim losses through Self Assessment · they are not automatically applied by HMRC. Losses on assets that were acquired at arm's length from a connected person (such as a family member) can only be offset against gains on disposals to the same connected person.
The "30-day rule" is a common shorthand for the requirement to report and pay CGT on UK residential property disposals quickly after completion. The current deadline is actually 60 days from the completion date · extended from 30 days in October 2021. If you sell a residential property (other than your main home under PRR) and a CGT liability arises, you must use HMRC's online CGT on UK Property service to submit a return and pay the tax within those 60 days. Missing the deadline results in an automatic late filing penalty plus interest on the unpaid tax. The 60-day rule does not apply to commercial property, which is reported through the normal Self Assessment process.
For informational purposes only · Not financial advice · Tax rates shown are for 2026/27