UK Capital Gains Tax Rates and Allowances Explained (2025–26)
Accurate rates and allowances for the current tax year, with practical guidance for property sellers, investors, and business owners.
If you have sold property, shares, or another asset for more than you paid for it, you may owe Capital Gains Tax (CGT) on the profit. This guide explains the current CGT rates and allowances for the 2025–26 tax year, in plain English, so you can understand your position before speaking to an accountant.
The rules changed significantly following the October 2024 Autumn Budget. If you have read guidance written before that date, some of the figures you have seen are now out of date.
What is Capital Gains Tax?
Capital Gains Tax is charged on the profit you make when you sell or dispose of an asset that has gone up in value. You do not pay tax on the full sale proceeds, only on the difference between what you paid and what you received.
CGT applies to a wide range of assets, including:
- Residential property that is not your main home, such as buy-to-let, second homes, inherited property
- Shares and investment funds held outside an ISA
- Business assets
- Valuable personal possessions worth more than £6,000
Your main home is usually exempt from CGT through Private Residence Relief, more on that below.
CGT is separate from Income Tax. You calculate it on your gains, not your earnings, though your income level does affect which CGT rate you pay. It is also worth noting that every individual receives a capital gains tax allowance each year, meaning a portion of your gains may be completely free of tax.
The Annual Exempt Amount
Every individual has a tax-free annual capital gains tax allowance, known as the Annual Exempt Amount (AEA). For 2025–26, this is £3,000.
This means the first £3,000 of your total taxable gains in a tax year is free of CGT. If your gains stay below this threshold, you have no CGT to pay and, in most cases, no reporting obligation either.
Key points about the AEA:
- You cannot carry unused allowance forward to the next tax year it is use it or lose it
- Married couples and civil partners each have their own £3,000 allowance, so together you can make £6,000 of gains tax-free.
- Trusts have a lower AEA of £1,500 or £3,000 if the beneficiary is a vulnerable person or child whose parent has died.
- Non-domiciled individuals who claimed the remittance basis in a tax year do not receive the AEA for that year
The annual capital gains tax allowance has been cut dramatically in recent years — from £12,300 in 2022–23, down to £6,000 in 2023–24, and further reduced to £3,000 from April 2024, where it remains for 2025–26. This significant reduction means that gains which would have been completely tax-free just a few years ago may now trigger a CGT liability, making proactive tax planning more important than ever.
CGT Rates for 2025–26
The rate of CGT you pay depends on whether your total income plus the taxable gain sits within the basic rate band or above it.
The basic rate band ends at £50,270 for 2025–26 (£37,700 of income above the £12,570 personal allowance).
Your gain is added on top of your income for the year. If part of the gain falls below £50,270 and part above it, you pay two different rates.
Current CGT rates at a glance
| Asset type | Basic rate taxpayer | Higher or additional rate taxpayer | Notes |
|---|---|---|---|
| Residential property (for example buy to let) | 18% | 24% | Main home usually exempt via PRR |
| Shares and other assets | 18% | 24% | Aligned with property rates from Oct 2024 |
| Business disposal (BADR) | 14% | 14% | Up to £1m lifetime limit. Rises to 18% from 6 April 2026 |
| Trusts | 24% | 24% | AEA is £1,500 for most trusts |
Before 30 October 2024, the standard CGT rates were 10% and 20% for non-property assets, and 18% and 28% for residential property. The Autumn Budget 2024 changed this, raising the standard rates to 18% and 24% and aligning property and shares.
CGT on Property
If you sell a residential property that is not your main home — such as a buy to let, holiday cottage, or inherited property — you will pay CGT on any gain above your £3,000 capital gains tax allowance.
The CGT rates on residential property are 18% for basic-rate taxpayers and 24% for higher- or additional-rate taxpayers.
Calculating your gain on a property
Your gain is broadly the sale price minus the purchase price, minus allowable costs. Allowable costs include:
- Solicitor and conveyancing fees when buying and selling
- Stamp Duty Land Tax paid on purchase
- Capital improvement costs not repairs or maintenance
- Estate agent fees on sale
From that figure, deduct your £3,000 AEA. The remainder is your taxable gain.
The 60 day reporting rule for property
If you sell a UK residential property and there is CGT to pay, you must report and pay within 60 days of completion. This is done through HMRC’s online ‘Report and pay CGT on UK property’ service and cannot wait until your annual Self Assessment return.
Failure to report within 60 days can result in an automatic penalty, even if the tax itself is paid correctly.
Private Residence Relief
If you are selling your main home, you are likely entitled to Private Residence Relief (PRR), which exempts the gain that arose while you lived there as your main residence. In many cases, this means no CGT at all on a main home sale.
However, you may have a partial CGT liability if you let part of the property, used part of it exclusively for business, or had periods where it was not your main residence. The last nine months of ownership are always treated as a period of main residence for PRR purposes, even if you were not living there at the time.
Non-residents selling UK property
Non UK residents are also subject to CGT on gains from UK residential property. You must report to HMRC within 60 days of completion, regardless of whether a gain was made.
CGT on Shares and Other Investments
Gains from selling shares, investment funds, or other assets outside an ISA are subject to CGT at 18% and 24%.
Assets held inside an ISA
Gains made inside a Stocks and Shares ISA are completely free of CGT. Maximising your annual ISA allowance (£20,000 for 2025–26) ensures future growth is sheltered.
The Bed and ISA strategy
If you hold investments outside an ISA, you can sell them potentially using your £3,000 AEA and repurchase them inside an ISA. Future growth is then tax-free.
Enterprise Investment Scheme
Shares held through the Enterprise Investment Scheme (EIS) for at least three years are exempt from CGT on disposal and may qualify for additional reliefs.
Business Asset Disposal Relief
Business Asset Disposal Relief (BADR) gives qualifying business owners a reduced CGT rate on business sales.
For 2025–26, BADR applies at 14% on the first £1 million of qualifying lifetime gains. From 6 April 2026, the rate rises to 18%.
To qualify, you generally must have owned the business for at least two years and meet shareholding and role requirements.
How Much is Capital Gains Tax UK
The amount you owe depends on two key factors the type of asset you have sold and your total income for the tax year. For most assets, including shares and investment funds, basic-rate taxpayers pay 18%, while higher- and additional-rate taxpayers pay 24%. The same rates apply to residential property, such as buy-to-let or second homes. Business owners selling qualifying assets may benefit from a reduced 14% rate under Business Asset Disposal Relief, up to a £1 million lifetime limit. Always deduct your £3,000 annual exemption from your total gain before working out what you owe.
How to Calculate Your CGT
Example:
Sale price £280,000, minus purchase price £200,000, minus costs and improvements, gives a gain of £65,500. After the £3,000 allowance, taxable gain is £62,500.
At 24%, CGT would be £15,000.
Strategies to Reduce Your CGT Bill
- Use your annual exemption each year
- Transfer assets between spouses or civil partners
- Contribute to a pension to expand your basic rate band
- Offset capital losses against gains
- Time disposals across tax years
- Use an ISA for long-term investments
How to Report and Pay CGT
Residential property must be reported and paid within 60 days of completion. Other assets are reported via Self Assessment by 31 January following the tax year.
Keep full records of purchase costs, improvement costs, and sale proceeds for at least four years after the tax year of disposal.
