Type and hit Enter to search
📍 Quick Answer — TL;DR
For 2026/27, the UK CGT landscape is the toughest it has been in decades. Your Annual Exempt Amount (tax-free allowance) stands at a historic low of £3,000 — down from £12,300 just three years ago. Rates have been equalised: 18% for basic rate taxpayers and 24% for higher and additional rate taxpayers across virtually all asset classes, including shares, second homes, and crypto. If you are selling a business, the Business Asset Disposal Relief (BADR) rate has climbed to 18% this year — up from 10% in 2024/25. The era of casual asset disposals without a tax bill is over. Active, annual tax planning is now essential for every investor.
🔴 £3,000 AEA: the lowest in the scheme's history — every £1 above it is taxable.
🔴 60-day deadline: sell a residential property and miss the HMRC window — instant £100 fine.
🟡 BADR at 18%: entrepreneurs selling a business face three times the rate of 2024/25 (was 10%, then 14%).
📋 IN THIS GUIDE
UK Capital Gains Tax 2026/27: The £3,000 Allowance, 18%/24% Rates & BADR Realities
If you hold investments outside of a tax wrapper, own a second property, or are planning a business exit, you are navigating a fundamentally harder CGT environment than even three years ago. The Treasury's strategy has been methodical: slash the allowance, equalise the rates upward, and tighten business reliefs.
This guide covers every rate, every threshold, every relief, and every strategy available to investors, landlords, and business owners in 2026/27 — including the four core mitigation approaches that can legally eliminate or defer a significant part of your liability.
🚨 FOUR CGT FACTS EVERY UK INVESTOR AND LANDLORD MUST KNOW IN 2026
📉 £3,000 allowance: a 76% cut in three years
The Annual Exempt Amount was £12,300 in 2022/23. It is now £3,000. A gain of just £3,001 from selling shares or a second property now triggers a mandatory HMRC report and a tax bill.
⏰ 60-day property rule — many landlords still miss it
When you sell any UK residential property that is not your main home, you have exactly 60 days from completion to pay CGT to HMRC. Missing this triggers an immediate £100 penalty, plus daily interest. Self Assessment the following January is too late.
💼 BADR has tripled since 2024 — review your exit timing
Business Asset Disposal Relief (Entrepreneurs' Relief) was 10% in 2024/25, rose to 14% in 2025/26, and is now 18% from April 2026. If you are planning a business sale, every year you wait increases your tax on the first £1m of gain by up to 8%.
📋 Allowance is use-it-or-lose-it — no carry forward
Your £3,000 annual exemption cannot be carried forward to next year if unused. Systematic annual asset harvesting — selling enough to use the allowance each year — is now the single most important free wealth preservation tool available.
The 2026/27 CGT Landscape: Simpler Rates, Higher Cost
The Treasury's CGT reform over the last three years has followed a clear pattern: reduce the tax-free allowance, remove the complexity of different rates for different asset classes, and increase the uniform rate that applies. The result is a simpler system — but a substantially more expensive one for anyone holding assets outside a tax wrapper.
📋 What counts as a "chargeable disposal"? Any sale, gift, exchange, or deemed disposal of a chargeable asset triggers CGT. This includes: shares held outside an ISA, crypto-assets, second properties, buy-to-let properties, inherited property you sell above probate value, and valuable personal assets (jewellery, art, collectibles) above £6,000 in value. Your main home is exempt via Private Residence Relief — provided it has always been your main residence.
UK Capital Gains Tax Rates 2026/27 — The Equalisation Rule
✅ The equalisation — what changed
Previously, residential property gains were taxed at 18% (basic) and 28% (higher rate) — a premium over shares and other assets. As of 2024/25, all standard chargeable assets are equalised at 18% and 24%. This removed the property premium — but increased the rate on shares from 10%/20% to 18%/24%, making equity investing outside an ISA more expensive than before.
Carried interest: a landmark 2026 change
📋 Carried interest — the fund manager treatment (from April 2026)
From 6 April 2026, carried interest profit-shares for investment fund managers are no longer treated as capital gains. They now fall entirely within the income tax framework, with HMRC applying a 72.5% multiplier to the qualifying amount before calculating tax.
Effective rate impact: Under the old flat 32% CGT rate → new income tax treatment at Additional Rate → effective rate over 34% once NIC is factored in. This is one of the most significant specific CGT changes in the 2026/27 year for the asset management industry.
🌐 Key assets and their CGT treatment at a glance
The £3,000 Annual Exempt Amount: A Historic Squeeze — and How to Use It
Your Annual Exempt Amount (AEA) is the profit you can make on asset disposals in a single tax year before HMRC claims its share. In just three years, it has been cut by 76%. Understanding both its dramatic erosion and the strict rules around using it is foundational to any effective CGT strategy in 2026.
The freefall of the Annual Exempt Amount
⚠️ This is not a "wealth tax" — it affects ordinary savers
If you hold an index fund outside an ISA and sell a portion to fund home improvements or pay down your mortgage, a profit of just £3,001 means you must declare the gain to HMRC and pay 18% or 24% on that £1 above the allowance. Many everyday investors are unaware they now face this obligation.
The rules every investor must know
Use it or lose it — zero carry-forward
Any unused portion of your £3,000 AEA cannot be rolled into the next tax year. If you only realise a £1,000 gain in 2026/27, the remaining £2,000 is permanently lost. This makes annual gain harvesting — deliberately realising gains up to the limit each year — mandatory for systematic investors.
Couples double the allowance
Married couples and civil partners each have their own separate £3,000 allowance. By ensuring jointly-held assets are structured to use both allowances — potentially £6,000 tax-free combined — and by transferring assets between spouses on a no gain/no loss basis before sale, couples have a significant built-in advantage.
Reporting threshold — even below the AEA
If your total proceeds from all disposals in the tax year exceed four times the AEA (currently £12,000), you must still declare those disposals on a Self Assessment tax return — even if your net gain falls below £3,000. Failing to report when required can result in penalties independent of any tax owed.
✅ The permanent solution: move assets into an ISA
There is no CGT — ever — on assets held inside a Stocks & Shares ISA. The Bed & ISA strategy (covered in section 06) allows you to systematically transfer existing holdings inside the ISA wrapper, eliminating future CGT liability permanently — and without crystallising gains above your £3,000 allowance. See our Stocks & Shares ISA guide for rates and providers.
Property Sales & the 60-Day Deadline: The Rule Most Landlords Still Miss
Selling a second home, buy-to-let investment, or an inherited residential property is a CGT event — and one with an unforgiving reporting mechanism that operates completely separately from your annual Self Assessment tax return.
🚨 URGENT — THE 60-DAY RULE
You have exactly 60 days from completion — not from the tax year end
❌ Do NOT wait for Self Assessment
You cannot wait until 31 January to report via your annual tax return. The 60-day clock starts ticking the moment your property sale completes — completely independently of the Self Assessment calendar.
📱 You must use the HMRC digital service
Use the 'Report and pay Capital Gains Tax on UK property' service via your Government Gateway account online. Paper forms are not accepted for this reporting obligation.
💸 Penalties for missing the deadline
An immediate £100 penalty on day 61. A further penalty after 6 months. Daily interest accrues on unpaid tax throughout. HMRC pursues these charges — even where the overall tax liability is low.
How property CGT is calculated
Deductible costs & key property reliefs
✅ Costs you CAN deduct
Purchase price & Stamp Duty Land Tax paid on acquisition
Legal / conveyancing fees on both purchase and sale
Estate agent fees on sale
Capital improvements: extensions, loft conversions, new kitchens (permanent additions only)
Costs of gaining planning permission for improvements
❌ Costs you CANNOT deduct
Routine maintenance and repairs (painting, replacing like-for-like fixtures)
Mortgage interest payments (these are a letting expense, not a CGT deduction)
Insurance premiums or letting agent management fees
🏠 Private Residence Relief (PRR)
Your main home is fully exempt from CGT via PRR — provided you have lived in it throughout your ownership and have not let it out commercially or used part of it exclusively for business. If you have temporarily moved out, let a room, or lived abroad while owning the property, PRR may be partially restricted — take specialist advice before selling.
Business Asset Disposal Relief: The 18% Reality for Business Exits in 2026
Business Asset Disposal Relief (BADR) — formerly Entrepreneurs' Relief — allows you to pay a reduced CGT rate when you sell all or part of a qualifying business or business assets. In 2026/27, it delivers a bitter pill to anyone who delayed their exit: the rate has now climbed to 18%, triple the 10% it stood at just two years ago. Every year of delay has cost business owners dearly — and the direction of travel shows no sign of reversing.
⚠️ Planning an exit? With BADR at 18% and the standard Higher Rate at 24%, the relief still offers a meaningful 6-percentage-point saving on the first £1 million of qualifying gain. But the window of maximum benefit has narrowed dramatically. Read the full Planning & Strategies guide before putting your business to market.
The rate trajectory — and what it has cost
📋 Do you qualify for BADR? Key criteria
You are selling all or part of your trading business (sole trade, partnership share, or personal company)
You have owned the business for at least 2 years before the disposal date
For a company: you hold at least 5% of shares and voting rights, and are an officer or employee
Your lifetime qualifying gains have not already exceeded the £1 million cap
Additional BADR changes and related reliefs
💼 BADR at 18% — the full current picture
📋 Investors' Relief — aligned with BADR
Investors' Relief applies to external investors in unlisted trading companies. Its lifetime limit has been slashed from £10m to £1m — now aligned with BADR — and is also taxed at 18% from April 2026.
If you were planning an exit relying on the £10m Investors' Relief limit, this is a significant reduction requiring immediate professional review.
🤝 Employee Ownership Trusts (EOTs) — 50% partial relief
Selling your business to an Employee Ownership Trust previously qualified for full CGT exemption. As of 2026/27, this exemption applies only to 50% of the gain. The remaining 50% is taxed at standard CGT rates (18% or 24%).
EOT sales completed before the rule change may still qualify for full relief. Take specialist advice if you are mid-transaction.
Four Strategies to Legally Reduce Your Capital Gains Tax Bill in 2026
With the allowance at its lowest level in history and rates equalised upward, passive compliance is not a strategy. The following four methods are the most effective — and legally robust — tools available to UK investors, landlords, and business owners in 2026/27.
Your Salary Determines Your CGT Rate: The Band Stacking Mechanism Explained
Your CGT rate is not fixed independently — HMRC calculates it by stacking your capital gains on top of your taxable income. If a large gain pushes you from the Basic Rate band into the Higher Rate band, you will pay two different CGT rates on different portions of the same gain. Understanding this mechanism is critical for anyone planning a significant asset disposal.
The band stacking mechanism — worked example
Strategic implications of band stacking
Time your disposal to a low-income year
If you are between jobs, on maternity/paternity leave, or on a sabbatical, your taxable income for that year will be lower — meaning more of your gain falls into the Basic Rate band (18%) rather than 24%. Deferring a planned sale by six months into a lower-income tax year can save thousands.
Split large disposals across two tax years
If you are selling a large portfolio and the disposal date is flexible (e.g. selling shares in stages), splitting across the 5 April year-end allows you to use two years' Annual Exempt Amounts (£6,000 combined) and potentially use Basic Rate band space in both years.
Pension contributions reduce band exposure
As covered in Strategy 4: a pension contribution reduces your Adjusted Net Income, pulling your income below the Higher Rate threshold — potentially converting a 24% CGT bill on the spilled portion to 18%, saving 6 percentage points on that slice of gain.
For more on how your Income Tax position interacts with your CGT rate — and how to model your liability precisely for 2026/27 — see our Income Tax guide and Calculators & Tools.
Capital Gains Tax FAQs
The most commonly asked questions about UK CGT in 2026/27 — with direct, HMRC-accurate answers on rates, reliefs, property, crypto and gifting rules.
Do I pay Capital Gains Tax when I sell my main home?
Do I pay Capital Gains Tax when I sell my main home?
No — your main home is fully exempt from CGT under Private Residence Relief (PRR), making it one of the most valuable tax shelters available to UK homeowners.
✅ Full PRR applies when: you have lived in the property as your main home throughout the entire period of ownership, you have not let any part of it out commercially, and no part of it has been used exclusively for business purposes.
⚠️ PRR can be partially restricted if: you have temporarily lived elsewhere (for work or while renovating), you have let rooms via Airbnb or on assured shorthold tenancies, you lived abroad while owning the property, or you owned the property for a period before moving in. In these scenarios, PRR may cover only a proportion of the gain — HMRC calculates this on a time-apportioned basis. Take specialist advice before completing the sale.
Are crypto-assets like Bitcoin subject to CGT in the UK?
Are crypto-assets like Bitcoin subject to CGT in the UK?
Yes — HMRC treats all crypto-assets (Bitcoin, Ethereum, altcoins, NFTs, stablecoins) as chargeable assets for CGT purposes, equivalent to shares. The same £3,000 Annual Exempt Amount and 18%/24% rates apply.
🚨 Taxable events for crypto include: selling crypto for GBP, exchanging one crypto for another (e.g. BTC to ETH — even without touching GBP), using crypto to purchase goods or services, and receiving crypto as income (though this may be Income Tax, not CGT). Simply holding crypto is not a taxable event — only disposal triggers CGT.
📋 Section 104 pooling: HMRC uses pool cost accounting for crypto — all purchases of the same crypto are averaged into a single cost pool. You cannot cherry-pick which coins you sell to minimise gains. Accurate record-keeping of every transaction date and value is essential for compliance — specialist crypto tax software (Koinly, CoinTracker) is strongly recommended.
I inherited a property — how is my CGT calculated when I sell?
I inherited a property — how is my CGT calculated when I sell?
Your CGT cost base is the probate value — the market value of the property on the date the person died — not what they originally paid for it. This is one of the most important rules for inherited asset disposal.
📊 Example: A property was valued at £300,000 at probate. You sell it 18 months later for £325,000. Your capital gain is £25,000 — not the £125,000 difference from what the deceased originally paid in 1999. After your £3,000 Annual Exempt Amount: £22,000 taxable. At 24% (Higher Rate): £5,280 in CGT.
💡 Important distinction — IHT vs CGT: If the estate was large enough to pay Inheritance Tax, that is entirely separate. Paying IHT does not reduce or offset your CGT liability when you later sell. The two taxes are calculated independently and on different bases.
What happens if I give a property or shares to my children?
What happens if I give a property or shares to my children?
Gifting a chargeable asset to a connected person (child, parent, sibling, business partner) is treated by HMRC as a disposal at full current market value — regardless of whether any money changes hands. This is one of the most frequently misunderstood CGT rules.
🚨 Example: You gift your daughter a buy-to-let worth £250,000 that you bought for £150,000. HMRC treats this as if you sold it to her for £250,000. Your capital gain: £100,000. After the £3,000 AEA: £97,000 taxable. At 24%: £23,280 CGT bill — despite receiving no cash.
✅ The spousal exception: Transfers between married couples and civil partners are made on a no gain, no loss basis — zero CGT regardless of value. This only applies to legal spouses/civil partners, not unmarried partners or cohabitants.
What costs can I deduct from my property capital gain?
What costs can I deduct from my property capital gain?
Your deductible costs reduce your gross gain before tax is applied. Accurately identifying all allowable deductions is one of the most straightforward ways to reduce your CGT bill legally — but many sellers miss costs incurred years earlier.
✅ Deductible costs:
Purchase price & SDLT paid on acquisition
Solicitor/conveyancing fees on both transactions
Estate agent fees on sale
Capital improvements: extensions, loft conversions, new kitchens (permanent only)
Planning permission costs for approved improvements
❌ Not deductible:
Routine maintenance & repairs (painting, cleaning, like-for-like fixture replacement)
Mortgage interest (a rental income deduction, not CGT)
Letting agent management fees
Insurance premiums
Furnishings or white goods
Keep all receipts and invoices from the date of purchase onwards — HMRC may request evidence for improvement costs, particularly on properties held for many years.
What is the 30-day rule and how does it affect my loss harvesting strategy?
What is the 30-day rule and how does it affect my loss harvesting strategy?
The 30-day rule (the "Bed and Breakfast rule") prevents taxpayers from selling an asset at a loss and immediately rebuying it purely to crystallise the loss for tax purposes. If you sell an asset and repurchase the same asset within 30 days, HMRC ignores the disposal — treating you as if the sale never happened.
⚠️ Practical impact: If you sell 500 shares in a company at a £4,000 loss (to offset gains elsewhere) and rebuy the same 500 shares the next day, the loss is disallowed. You must wait 31+ days before rebuying outside an ISA — by which point the share price may have moved significantly.
✅ The ISA workaround: The 30-day rule does not apply when you repurchase inside an ISA. Sell shares at a loss outside the ISA → immediately rebuy the same shares inside a Stocks & Shares ISA → the loss is fully crystallised for CGT purposes, and all future gains on those shares are now permanently tax-free. This is the definitive loss harvesting + Bed & ISA combined strategy for 2026.
Go Deeper on Every Dimension of Your Tax Bill
Capital Gains Tax intersects with Income Tax, ISA strategy, compliance deadlines, and business exit planning. Explore every angle below.
FULL HUB
UK Tax Hub — 2026/27 Overview
Every UK tax type covered in one place. The complete starting point for all 2026/27 planning.
INCOME TAX
Income Tax Guide 2026/27
Your salary band directly determines your 18% or 24% CGT rate — understand the interaction fully.
STRATEGIES
Tax Planning & Strategies Guide
Business exit planning, salary sacrifice, pension contributions and CGT deferral — the full toolkit.
COMPLIANCE
HMRC Rules & Compliance
60-day property deadline, MTD for ITSA, Self Assessment obligations and HMRC penalty rules.
TOOLS
CGT Calculators & Tools
Model your disposal, apply your £3,000 allowance and calculate your exact 2026/27 CGT liability.
BED & ISA WRAPPER
Stocks & Shares ISA Guide
Best platforms for executing the Bed & ISA strategy. 0% CGT on all gains and dividends inside the wrapper — forever.
With a £3,000 Allowance and 24% Rates, Doing Nothing Is the Costliest Strategy of All
The era of passive investing without a tax plan is over. With the Annual Exempt Amount at its lowest in history, BADR at 18%, and the 60-day property clock ticking from the moment your sale completes, every investor and landlord needs an active, annual CGT strategy.
📌 YOUR 2026/27 CGT ACTION CHECKLIST
Harvest gains annually: use your £3,000 AEA every tax year before 5 April — it cannot be carried forward. Sell enough assets each year to crystallise exactly £3,000 of profit and immediately reinvest inside your ISA (Bed & ISA).
Couples — use both allowances: transfer assets to your spouse before selling to access two £3,000 exemptions (£6,000 combined) and potentially reduce the applicable rate from 24% to 18%.
Register capital losses: if you hold investments sitting at a loss, realise them before 5 April and declare on your Self Assessment — losses carry forward indefinitely against future gains.
Selling a property? Set a calendar reminder for Day 45 from completion — file and pay CGT via HMRC's digital service before Day 60. Missing this triggers an immediate £100 penalty plus interest.
Planning a business exit? BADR is now 18% — review your exit timing and structure immediately. Every year of delay at the current rate trajectory increases your tax cost on qualifying gains significantly.
TaxYZ provides educational information only and is not regulated by the FCA or ICAEW. All rates, allowances and thresholds reflect the 2026/27 tax year as published by HMRC. This page does not constitute tax, legal or financial advice. Please consult a qualified tax adviser before making asset disposal decisions based on this content.