Capital Gains Tax Rates and Allowances Explained for 2026/27

Capital Gains Tax rates are an important consideration for anyone selling an asset that has increased in value. Whether you are disposing of a buy-to-let property, shares, business assets or valuable possessions, understanding the current rules helps you estimate your potential tax liability and plan before completing a sale. For the 2026/27 tax year, individuals continue to benefit from a Capital Gains Tax allowance, known as the Annual Exempt Amount, which allows a limited amount of capital gains to be realised without paying tax. However, this allowance has reduced significantly in recent years, making accurate planning more important for investors, property owners and business owners. The UK Capital Gains Tax rates depend on the type of asset sold and your overall taxable income for the year. Understanding how the rates, allowances and reporting rules work can help you avoid unexpected liabilities and ensure that all available reliefs are considered. CGT sits alongside the wider Income Tax rules explained in our ultimate guide to personal tax in the UK, since your income level affects which CGT rate applies. This guide explains the latest CGT rates UK taxpayers need to know for 2026/27, how the Capital Gains Tax allowances work, and what individuals should consider when disposing of assets.

What Is Capital Gains Tax?

Capital Gains Tax (CGT) is a tax charged on the profit made when you sell or dispose of an asset that has increased in value since you acquired it. CGT is not charged on the full sale price. Instead, it applies to the taxable gain after deducting the original purchase cost, qualifying expenses and available exemptions or reliefs. Capital Gains Tax may apply to a wide range of assets, including:

• Buy-to-let properties and second homes.
• Shares and investment funds held outside tax-efficient wrappers.
• Business assets.
• Land and commercial property.
• Valuable personal possessions worth more than £6,000.

Your main residence is normally exempt from CGT through Private Residence Relief, although exceptions can apply where the property has been rented out, used for business purposes or does not qualify fully as your main home. Capital Gains Tax is separate from Income Tax. However, your income level affects which CGT rate applies because taxable gains are added on top of your income when determining whether you remain within the basic-rate Income Tax band.

Capital Gains Tax Rates for 2026/27

The UK Capital Gains Tax rates depend on the type of asset and your taxable income position during the tax year. For individuals during 2026/27:

Asset Type	Basic Rate Taxpayer	Higher or Additional Rate Taxpayer
Residential property	18%	24%
Shares and other taxable assets	18%	24%
Qualifying business disposals under BADR	18%	18%

Residential property gains continue to have separate rates because they are taxed differently from many other capital assets. Your taxable gain is added to your taxable income for the year. If your income does not fully use your basic-rate band, some of your gain may be taxed at the lower CGT rate, with the remaining amount taxed at the higher rate.

Capital Gains Tax Allowances Explained

The main Capital Gains Tax allowance available to individuals is the Annual Exempt Amount. For 2026/27, the Annual Exempt Amount is:

• £3,000 for individuals and personal representatives.
• £1,500 for most trustees.

This means individuals can make up to £3,000 of taxable capital gains in a tax year before Capital Gains Tax becomes payable. The allowance applies to your total gains for the year rather than separately to each asset. For example, if you sell shares and a second property in the same tax year, both gains are considered together when applying the allowance.

How the Capital Gains Tax Allowance Works

The Annual Exempt Amount operates on a use-it-or-lose-it basis. If you do not use your allowance during the tax year, it cannot be carried forward to future years. Other important points include:

• Each individual has their own Annual Exempt Amount.
• Married couples and civil partners may transfer assets between themselves without an immediate CGT charge if they meet the relevant conditions.
• Joint ownership can allow both owners to use their available allowances when a taxable disposal occurs.
• Unused allowances cannot be transferred between individuals.

The reduction in the Annual Exempt Amount means that more investors and property owners may now have reporting obligations than in previous years.

Why Capital Gains Tax Planning Is More Important

The reduction in Capital Gains Tax allowances has increased the importance of planning before disposing of valuable assets. Previously, individuals could realise larger gains without paying CGT. With the Annual Exempt Amount now significantly lower, transactions that previously created no tax liability may now require careful review. Planning before a disposal allows taxpayers to consider:

• The timing of the sale.
• Available capital losses.
• Ownership structure.
• Potential reliefs.
• The impact on overall income levels.

Capital Gains Tax on Property

Capital Gains Tax on property is one of the most common CGT issues faced by taxpayers, particularly landlords selling investment properties. CGT may apply when selling:

• Buy-to-let properties.
• Holiday homes.
• Inherited properties.
• Land held as an investment.
• A former main residence that no longer qualifies fully for relief.

The taxable gain is calculated by comparing the property’s disposal value with the allowable acquisition costs. Allowable deductions may include:

• The original purchase price.
• Stamp Duty Land Tax paid on acquisition.
• Legal fees connected with buying and selling.
• Estate agent fees.
• Qualifying capital improvement costs.

Routine repairs and maintenance costs are normally not deducted from the capital gain because they may already have been considered under property income rules.

Calculating Capital Gains Tax on Property

The calculation generally follows this structure:

• Sale proceeds.
• Less original purchase cost.
• Less allowable acquisition expenses.
• Less qualifying improvement costs.
• Less disposal expenses.
• Less available Capital Gains Tax allowance and losses.

The remaining amount is the taxable gain on which the appropriate CGT rate is applied. Keeping accurate records throughout ownership is essential. Missing invoices or completion documents can result in a higher taxable gain because deductions cannot be supported.

The 60-Day Reporting Rule for UK Property Sales

Where a UK residential property sale creates a Capital Gains Tax liability, the disposal normally needs to be reported and the estimated tax paid within 60 days of completion. This deadline applies separately from the normal Self Assessment deadline. Landlords and property sellers should not wait until their annual tax return if the property reporting requirement applies. Failure to report within the required timeframe may result in penalties and interest charges.

Private Residence Relief and Capital Gains Tax

Private Residence Relief (PRR) is one of the most important exemptions when considering Capital Gains Tax rates on residential property. If a property has been your only or main home throughout the period of ownership, you will usually not pay Capital Gains Tax when selling it because the gain is covered by Private Residence Relief. However, PRR may not cover the entire gain where:

• The property was rented out for part of the ownership period.
• A part of the property was used exclusively for business purposes.
• The property was not your genuine main residence.
• You owned multiple properties and cannot demonstrate which was your main home.

Where only part of the ownership period qualifies, the gain may need to be apportioned between exempt and taxable periods. Landlords who previously lived in a property before converting it into a buy-to-let investment should review whether any available reliefs apply before calculating their final liability.

Capital Gains Tax on Shares and Investments

CGT rates UK investors need to consider also apply to many investments held outside tax-efficient accounts. Capital Gains Tax may apply when selling:

• Individual shares.
• Investment funds.
• Exchange-traded funds.
• Cryptocurrency assets.
• Other taxable investments.

The calculation works in a similar way to property disposals. The gain is generally calculated by deducting the original acquisition cost and allowable expenses from the disposal proceeds. Investors should keep records of:

• The date investments were purchased.
• The purchase price.
• Broker fees and transaction costs.
• Sale proceeds.
• Any previous capital losses.

Without accurate records, calculating taxable gains can become more complicated and may result in incorrect reporting.

Using ISAs to Protect Future Investment Gains

One effective way to reduce future exposure to Capital Gains Tax is by using tax-efficient investment accounts such as Individual Savings Accounts (ISAs). Investments held within a Stocks and Shares ISA are generally free from Capital Gains Tax. This means any future growth and gains generated within the ISA are not subject to CGT. For investors with shares held outside an ISA, a strategy such as transferring investments into an ISA over time may help reduce future tax exposure, although selling investments may create a CGT liability if gains exceed the available allowance.

Enterprise Investment Scheme and Capital Gains Tax Relief

The Enterprise Investment Scheme (EIS) provides tax incentives for individuals investing in qualifying smaller companies. Where EIS shares meet the relevant conditions and are held for the required period, gains arising on disposal may benefit from Capital Gains Tax advantages. EIS investments can be attractive for some investors because they may provide:

• Income Tax relief on qualifying investments.
• Potential CGT advantages.
• Loss relief where qualifying investments fail.

However, EIS investments carry investment risk and are not suitable for everyone. Investors should consider both tax benefits and commercial risks before committing funds.

Business Asset Disposal Relief in 2026/27

Business Asset Disposal Relief (BADR) allows qualifying business owners to pay a reduced rate of Capital Gains Tax when disposing of certain business assets. For the 2026/27 tax year, BADR applies at an 18% Capital Gains Tax rate on qualifying gains up to the lifetime limit of £1 million. To qualify, individuals generally need to meet conditions relating to:

• The type of business asset being disposed of.
• The length of ownership.
• The individual’s role within the business.
• Minimum shareholding requirements for company disposals.

BADR can provide valuable tax savings for entrepreneurs selling a trading business, but the conditions are detailed and should be reviewed before completing a transaction.

How Much Is Capital Gains Tax in the UK?

The amount of Capital Gains Tax payable depends on three main factors:

• The size of the taxable gain.
• The type of asset sold.
• Your taxable income position for the year.

For most individuals during 2026/27:

• Residential property gains are taxed at 18% or 24%.
• Shares and other taxable assets are taxed at 18% or 24%.
• Qualifying business disposals may benefit from BADR at 18%.

Before calculating CGT, taxpayers should deduct:

• Allowable costs.
• Available capital losses.
• The £3,000 Annual Exempt Amount where available.
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How to Reduce Your Capital Gains Tax Liability

While Capital Gains Tax cannot always be avoided, careful planning can help reduce the amount payable. Common legitimate strategies include:

Use Your Annual Capital Gains Tax Allowance

The Annual Exempt Amount is available each tax year but cannot be carried forward. Planning disposals across tax years may allow individuals to use multiple allowances where appropriate.

Transfer Assets Between Spouses or Civil Partners

Transfers between spouses and civil partners who meet the relevant conditions can generally take place on a no-gain, no-loss basis. This may allow better use of both individuals’ tax positions.

Offset Capital Losses

Capital losses from other investments may reduce taxable gains. Keeping records of losses is important because they may be valuable when future gains arise.

Consider Pension Contributions

Pension contributions may increase the amount of your income taxed at the basic rate, which can affect the Capital Gains Tax rate applying to your taxable gains.

Plan the Timing of Disposals

Selling assets at different times may help manage tax liabilities, particularly where several disposals are planned.

Common Capital Gains Tax Mistakes

Many taxpayers make avoidable mistakes when calculating or reporting gains. Common errors include:

• Using outdated UK Capital Gains Tax rates.
• Forgetting the reduction in the Annual Exempt Amount.
• Failing to claim allowable acquisition costs.
• Confusing repairs with capital improvements.
• Missing the 60-day property reporting deadline.
• Ignoring available capital losses.
• Assuming all property gains qualify for Private Residence Relief.
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Key Takeaways

Understanding Capital Gains Tax rates and Capital Gains Tax allowances is essential when selling property, investments or business assets. The current CGT rates UK taxpayers need to consider are generally 18% and 24%, with different rules applying depending on the asset type and individual circumstances. Although the Capital Gains Tax allowance has reduced significantly in recent years, careful planning can still help taxpayers manage liabilities by using available reliefs, allowances, losses and timing strategies. Keeping accurate records and reviewing your position before selling an asset can help ensure that Capital Gains Tax is calculated correctly and all available opportunities are considered.

Case Study: Planning a Large Asset Disposal Using 2026/27 Capital Gains Tax Rules

Sarah visited our Fulham Broadway office after planning to sell a valuable investment asset and wanted to understand how the Capital Gains Tax rates and allowances for 2026/27 would affect her final tax liability. She wanted to ensure she used the available allowances correctly and avoided unexpected CGT costs before completing the disposal.

During the consultation, we reviewed Sarah’s planned disposal, original purchase records and associated costs to calculate her estimated taxable gain. We explained how the Capital Gains Tax allowance for 2026/27 works, including the £3,000 Annual Exempt Amount, the current CGT rates that apply to residential property and other assets, and how her taxable income position could affect the rate charged. We also discussed potential planning opportunities, including the use of available capital losses, timing of disposals across tax years and reviewing whether any reliefs could apply before the transaction was completed.

Following the review, Sarah gained a clearer understanding of the UK Capital Gains Tax rates for 2026/27, the allowances available to her and the steps required to report the disposal correctly. With proper planning before the sale, she was able to make an informed decision while ensuring her tax position remained fully aligned with HMRC requirements.