Capital Gains Tax UK 2025/26: Rates, Allowances & How to Reduce It
Learn about the 3000 pound CGT annual exempt amount, 18%/24% residential property rates, 10%/20% rates on other assets, and legal ways to reduce your CGT bill.
What Is Capital Gains Tax?
Capital Gains Tax (CGT) is charged on the profit you make when you sell or dispose of an asset that has increased in value. You pay CGT on the gain — the difference between what you paid for the asset and what you sold it for — not the total sale proceeds. CGT applies to assets including shares, investment property, business assets, and valuable personal possessions worth more than £6,000 (such as jewellery or art).
Your main home is usually exempt from CGT under Private Residence Relief, provided it has been your only or main residence throughout your ownership. CGT also does not apply to assets held inside an ISA or pension.
Annual Exempt Amount 2025/26
Every UK resident receives an Annual Exempt Amount (AEA) of £3,000 for 2025/26. This means the first £3,000 of capital gains in a tax year is completely tax-free. This allowance has fallen sharply — from £12,300 in 2022/23 — making proactive tax planning more important than ever.
Couples can potentially use both allowances by ensuring assets are jointly owned, effectively sheltering £6,000 of gains each year before any CGT becomes due.
Capital Gains Tax Rates 2025/26
| Asset Type | Basic Rate Taxpayer | Higher/Additional Rate Taxpayer |
|---|---|---|
| Residential Property | 18% | 24% |
| Other Assets (shares, funds, etc.) | 10% | 20% |
| Business Asset Disposal Relief | 14% (rising to 18% from April 2026) on up to £1m lifetime gains | |
Your CGT rate depends on whether the gain, when added to your other taxable income, falls within the basic rate band or above it. A basic rate taxpayer can still pay the higher CGT rate if the gain pushes their total income above £50,270.
Reporting and Paying Capital Gains Tax
For UK residential property sales, you must report the gain and pay the tax within60 days of completion using HMRC's online service — even if you also file a Self Assessment return. For other assets, gains are reported through Self Assessment, due by 31 January following the end of the tax year.
You must report gains even if you have no tax to pay if the total proceeds exceed four times the Annual Exempt Amount (£12,000 for 2025/26).
How to Reduce Your Capital Gains Tax Bill
- Use your annual exempt amount: Don't let the £3,000 go to waste — realise gains up to the limit each year where possible.
- Use ISAs: Transfer investments into a Stocks and Shares ISA over time (known as Bed and ISA). Future gains and income are then sheltered permanently.
- Transfer to a spouse or civil partner: Transfers between spouses are tax-free. You can use their allowance and potentially lower rate.
- Offset losses: Capital losses from the same or prior tax years can be set against gains to reduce the taxable amount.
- Timing: Delay a disposal until after 5 April to defer the tax bill by an entire year, and potentially benefit from a new annual exempt amount.
- Charitable giving: Donating assets to charity is free of CGT and also gives Income Tax relief.
Use our Capital Gains Tax Calculator to estimate your CGT liability →