Guide · Tax
Capital Gains Tax UK: What You Owe When You Sell
Sell shares, a second property, crypto, or a business asset for a profit and you will likely owe Capital Gains Tax. The annual exempt amount has been cut from £12,300 to £3,000 since 2023 — making CGT planning more important than ever.
What triggers CGT?
CGT is charged on the gain — the difference between what you paid for an asset (the "base cost") and what you sold it for — not the total proceeds. You can deduct allowable costs from the gain: purchase fees, legal costs, improvement expenditure, and selling costs.
CGT applies to disposals of: shares and funds held outside an ISA, residential property (except your main home), commercial property, business assets, cryptocurrency, and most other valuable assets. Assets inside an ISA or SIPP are exempt from CGT entirely.
2026/27 rates and allowances
The rates depend on your total taxable income for the year. Gains that fall within the basic rate band (after adding them to your income) are taxed at 18%. Gains above the higher rate threshold (£50,270 in 2026/27) are taxed at 24%. A single tax return can include gains taxed at both rates if the gain straddles the threshold.
| Asset type | Basic rate taxpayer | Higher rate taxpayer |
|---|---|---|
| Shares, funds, crypto | 18% | 24% |
| Residential property | 18% | 24% |
| Qualifying business assets (BADR) | 14% | 14% |
Worked example: selling shares
A higher-rate taxpayer sells a fund held outside an ISA, making a gain of £18,000:
| Item | Amount |
|---|---|
| Total gain | £18,000 |
| Annual exempt amount | −£3,000 |
| Taxable gain | £15,000 |
| CGT at 24% | £3,600 |
The same gain inside a Stocks & Shares ISA would attract zero CGT. This is the core reason to maximise ISA contributions before holding investments in a general investment account (GIA).
How to reduce your CGT bill
- Use ISAs — Hold investments inside a Stocks & Shares ISA. Gains are exempt from CGT regardless of size.
- Use the annual exempt amount — Realise up to £3,000 of gains each year tax-free. You cannot carry this forward, so systematic annual "bed and ISA" moves are a common strategy.
- Offset losses — Crystallise unrealised losses in the same tax year to reduce your taxable gain. The asset can be repurchased after 30 days (to avoid the "bed and breakfast" anti-avoidance rules).
- Transfer to a spouse — Transfers between spouses/civil partners are exempt from CGT and use the other person's exempt amount and potentially lower tax rate.
- Time disposals across tax years — Spreading gains across two tax years doubles the annual exempt amount available and may keep you in the lower rate band.
Reporting and paying CGT
CGT must be reported via Self Assessment if your total gains exceed the annual exempt amount, or if your total proceeds exceed £50,000. For residential property sales, you must report and pay within 60 days of completion using HMRC's online CGT service — you do not need to wait for the end of the tax year.
Frequently asked questions
What is the Capital Gains Tax annual exempt amount for 2026/27?
The CGT annual exempt amount (AEA) is £3,000 for 2026/27 — significantly lower than the £12,300 allowance that applied before April 2023. This was cut to £6,000 in 2023/24 and then to £3,000 in 2024/25, where it remains. Any gains above £3,000 are taxable (subject to any available losses or reliefs).
What are the CGT rates in 2026/27?
For most assets (shares, funds, crypto, second properties): basic rate taxpayers pay 18%, higher and additional rate taxpayers pay 24%. For residential property: the rates are 18% (basic rate) and 24% (higher/additional rate). Business Asset Disposal Relief (formerly Entrepreneurs' Relief) provides a 14% rate on qualifying business assets, up to a £1 million lifetime limit.
Do I have to pay CGT on my main home?
No — your main home is fully exempt from CGT under Private Residence Relief (PRR), provided you have lived in it throughout ownership and it is not too large. If you have let part of the property, used it for business, or it exceeds 0.5 hectares, partial PRR may apply. Second homes and buy-to-let properties do not qualify for PRR.
Can I use losses to reduce my CGT bill?
Yes. Capital losses (from selling assets at a loss) can be offset against gains in the same tax year, or carried forward to future years if they exceed the year's gains. Losses must be reported to HMRC within 4 years of the end of the tax year in which they arose. You cannot offset losses against income — only against capital gains.