The annual Capital Gains Tax allowance has been slashed from £12,300 to just £3,000 in two years, dragging tens of thousands of ordinary investors and second-home owners into CGT for the first time. This guide explains the 2025/26 rates, what counts as a gain, the reliefs that still exist and how to use spousal transfers and tax shelters to keep more of what you've earned.
A capital gain is the difference between what you received when you sold an asset and what you originally paid for it, minus allowable costs (legal fees, broker fees, capital improvements). Each tax year you can offset the £3,000 Annual Exempt Amount before any tax is due.
Gains are added to your taxable income for the year to determine the rate. If your total income plus gains stays inside the basic-rate band (up to £50,270), the rate is lower. Above that, the higher rate applies.
For most assets — shares, funds, crypto, business assets — the rate is 18% within the basic-rate band and 24% above. These are the rates that apply after the October 2024 Budget changes.
Residential property (other than your main home) is also taxed at 18% and 24% — the previous 28% higher rate was reduced in April 2024. Carried interest is taxed at a flat 28% rising to income tax rates from 2026.
Private Residence Relief means your main home is fully exempt for the period you lived in it, plus the final 9 months of ownership regardless. Letting Relief still applies in narrow circumstances where you lived in the property at the same time as a tenant.
Business Asset Disposal Relief (formerly Entrepreneurs' Relief) gives a 14% rate on up to £1m of lifetime qualifying business gains, rising to 18% from April 2026. Gift Holdover Relief defers gains on gifts of business assets. Investors' Relief offers a 14% rate for unlisted trading company shares held 3+ years.
Transfers between spouses or civil partners are at no gain, no loss — meaning your spouse acquires the asset at your original cost. This effectively doubles your annual exemption (£6,000 between you) and lets you put gains in the lower-earning spouse's hands to use their basic-rate band.
Splitting a disposal across two tax years uses two annual exemptions (£6,000) instead of one. For listed shares, simply sell some on 4 April and the rest on 6 April. For property, the disposal date for CGT is the contract exchange date, not completion.
'Bed and ISA' means selling holdings in a general investment account and immediately repurchasing the same investments inside an ISA. The sale crystallises a gain (using your annual exemption), and from then on all future growth is tax-free. Many platforms automate this for free.
Pension contributions effectively shelter gains because pensions grow tax-free. Enterprise Investment Scheme (EIS) and Seed EIS investments offer CGT deferral and exemption respectively, in return for accepting higher investment risk.
If your total disposals exceed £50,000 in a tax year, yes — even if gains are within the £3,000 exemption. Otherwise, only if tax is due.
Within 60 days of completion — via a UK Property Account return separate from Self Assessment.
Yes — capital losses offset gains in the same year, then carry forward indefinitely once registered with HMRC within 4 years.
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