Capital Gains Tax UK 2025/26 — Rates, Allowance & How It Works
Capital Gains Tax (CGT) is the tax you pay when you sell or give away something that has gone up in value — shares, a second property, crypto, or a business asset. It has its own rates and its own tax-free allowance, and it catches many people by surprise at the moment they sell. This guide explains the 2025/26 rates of 18% and 24%, the £3,000 annual allowance, and how to work out what you owe.
What is Capital Gains Tax?
CGT is charged on the gain — the profit — you make when you dispose of an asset: selling it, giving it away, swapping it, or transferring it. The gain is broadly what you received (or the market value, if you gave it away) minus what you paid and minus allowable costs, such as buying and selling fees and the cost of improvements.
You pay CGT on the gain, not the full sale price: buy shares for £5,000, sell for £12,000, and your gain is £7,000 before the allowance.
CGT is separate from Income Tax. Your Personal Allowance does not shelter capital gains — gains have their own annual exempt amount, and your income still matters, because it decides which CGT rate applies to your gain.
What counts for Capital Gains Tax?
You may have to pay CGT when you dispose of:
- Shares and investments held outside an ISA or pension
- Property other than your main home — a second home, a buy-to-let, inherited property, or land
- Cryptoassets such as Bitcoin
- Business assets, including selling all or part of a business
- Personal possessions worth £6,000 or more — see the chattels rule below
What does not count
Some gains are exempt, and knowing these is worth as much as knowing the rates:
- Your main home. If the property was your only or main residence for the whole time you owned it, the gain is usually exempt under Private Residence Relief — problems arise when only part of it qualified, or when you let it out or lived elsewhere for a time.
- Gains inside an ISA or pension. Shares, funds and other investments held in an ISA or a pension are free of CGT, whatever the gain.
- Your private car. Cars are exempt from CGT.
- Personal possessions sold for £6,000 or less. A single personal possession (a “chattel”) sold for £6,000 or less produces no chargeable gain; above that, a special tapering calculation can limit the taxable gain. Sets of items count as one possession.
- Betting, lottery and Premium Bond winnings, and UK government gilts.
The annual exempt amount — £3,000
Each tax year, the first £3,000 of your gains is tax-free. This annual exempt amount applies per person, per tax year, and cannot be carried forward — if you do not use it, you lose it.
| Tax year | Annual exempt amount |
|---|---|
| 2022/23 | £12,300 |
| 2023/24 | £6,000 |
| 2024/25 | £3,000 |
| 2025/26 | £3,000 |
The allowance has been cut sharply in recent years, which is why gains that used to be tax-free are now taxable. Most trusts get £1,500. Spouses and civil partners each have their own £3,000 allowance.
The CGT rates — 18% and 24%
For individuals in 2025/26, the main CGT rates are:
| Situation | Rate |
|---|---|
| Gain within your unused basic-rate band | 18% |
| Gain above your unused basic-rate band | 24% |
Since 30 October 2024, the same rates apply to residential property and to shares and other assets — there is no longer a separate higher rate for property.
Your gains sit on top of your income. The basic-rate band runs up to £50,270 of total taxable income in 2025/26: the part of your gain that fits inside what is left of that band is taxed at 18%; the rest at 24%.
Worked example 1 — basic-rate taxpayer sells shares
Sarah earns a salary of £30,000 and sells shares, making a gain of £10,000.
- Gain: £10,000
- Less annual exempt amount: £3,000
- Taxable gain: £7,000
- Unused basic-rate band: £50,270 − £30,000 = £20,270
- The whole £7,000 fits inside the unused band, so it is all taxed at 18%
- CGT due: £7,000 × 18% = £1,260
Worked example 2 — higher-rate taxpayer sells a second property
James earns £60,000 and sells a second property, making a gain of £40,000.
- Gain: £40,000
- Less annual exempt amount: £3,000
- Taxable gain: £37,000
- His income of £60,000 already uses up the whole basic-rate band, so none of the gain is taxed at 18%
- CGT due: £37,000 × 24% = £8,880
Selling residential property — the 60-day rule
Property is where CGT most often bites, and the deadline is strictest. If you sell a UK residential property and CGT is due, you must report the gain and pay the tax within 60 days of completion — not at the end of the tax year — through a CGT on UK Property Account on GOV.UK.
The 60 days start from completion, not from exchange of contracts. Missing the deadline can mean penalties and interest, on top of the tax itself. You still report the gain on your Self Assessment tax return as well, and any payment already made is taken into account.
Private Residence Relief does not protect a second property, a buy-to-let, or a property you have not lived in for the whole period of ownership — though if you lived there at some point, relief may cover part of the gain.
Business Asset Disposal Relief
If you sell all or part of your business, or shares in your personal trading company, you may qualify for Business Asset Disposal Relief (BADR, formerly Entrepreneurs’ Relief), which taxes qualifying gains at a lower rate:
- 14% in 2025/26
- 18% from 6 April 2026
BADR has a lifetime limit of £1 million of qualifying gains per person, and strict conditions — for example, you generally need to have owned the business or shares for at least two years.
Gains on carried interest are taxed at 32% in 2025/26.
Losses — use them wisely
If you sell an asset for less than you paid, you have a loss. Losses can be set against gains in the same tax year, and unused losses carried forward — there is no time limit, but you must claim them within four years.
Where possible, use losses before your annual exempt amount, because losses are used first and the £3,000 allowance cannot be carried forward. You cannot claim a loss on a disposal to your spouse or civil partner, or on your private car.
How to report and pay
- Residential property: report and pay within 60 days of completion via a CGT on UK Property Account.
- Other assets: report the gain on your Self Assessment tax return and pay by 31 January.
- No Self Assessment return: report gains through HMRC’s “real time” Capital Gains Tax service.
Keep records of what you paid, what you sold for, the dates, and any costs.
What to check now
- Add up your gains for 2025/26 so far, and check how much of your £3,000 allowance is left.
- If you sold a residential property, check whether the 60-day reporting deadline applies to you.
- If you are planning a sale, check whether your main home qualifies for Private Residence Relief.
- If you have losses from this year or earlier years, check they are claimed and used in the right order.
- If you are selling a business, check whether Business Asset Disposal Relief applies before you rely on the 14% rate.
Frequently asked questions
What is the Capital Gains Tax rate in 2025/26?
18% on gains within your unused basic-rate band and 24% on gains above it. The same rates apply to residential property, shares and other assets.
How much Capital Gains Tax can I make tax-free?
The annual exempt amount is £3,000 per person for 2025/26. It cannot be carried forward to the next tax year.
Do I pay Capital Gains Tax on my main home?
Usually not. Your only or main residence is normally exempt under Private Residence Relief, provided it qualified for the whole period of ownership.
How quickly must I report selling a second property?
Within 60 days of completion, through a CGT on UK Property Account on GOV.UK. You also report it on your Self Assessment tax return.
Can I carry forward Capital Gains Tax losses?
Yes. Losses can be carried forward indefinitely, but you must claim them within four years. Use losses before your annual exempt amount where possible.
This article gives general information about UK tax, not personal financial or tax advice. Tax rules can change, and your situation may be different. Check GOV.UK or speak to a qualified accountant before you act.
