Capital Gains Tax is one of those taxes that feels simple until the asset is not simple. A second home. A crypto swap. Shares outside an ISA. A gifted asset. A small strip of land sold to a neighbour. Suddenly, the question is not just what you received, but what HMRC says you gained.
For the 2026 to 2027 tax year, the reduced allowance makes planning tighter. Not dramatic. Just less forgiving. This guide explains the main rules, current CGT rates, deadlines, reliefs, and practical steps that may reduce your capital gains tax bill.
What is Capital Gains Tax?
Capital Gains Tax is tax on the profit when you sell, gift, exchange, transfer, or otherwise dispose of an asset that has increased in value. It is not charged on the full sale proceeds. Only the gain matters, after allowable costs, reliefs, and the relevant allowance have been applied.
For 2026/27, the Annual Exempt Amount is £3,000 for individuals, personal representatives, and trustees for disabled people. Other trustees receive £1,500. Previously the amounts were £6,000 and £12,000 figures, but the rates and allowances are now different, so everyone in this matter must be aware of this.
| Entity Type | 2026/27 Tax-Free Allowance |
| Individuals | £3,000 |
| Trustees for Disabled People | £3,000 |
| Other Trustees | £1,500 |
| Personal Representatives | £3,000 |
When Capital Gains Tax Applies
Capital Gains Tax applies when you dispose of an asset and make a chargeable gain. That can happen through a sale, gift, exchange, compensation payment, transfer, or disposal after an asset is damaged or destroyed. It may apply to second homes, business assets, crypto assets, and stocks and shares held outside tax shelters.
A UK resident can be taxed on UK and overseas gains. Non-residents can still be caught by UK land rules. The detail matters because you may have to pay capital gains tax even when no cash reaches your bank account.
Non-UK resident disposals
Non-UK residents are not usually within UK CGT for every asset, but UK land and UK residential property are different. A disposal of UK property, land, or certain interests in property-rich companies can create a UK reporting requirement. The rule can also apply where gains made relate to an indirect property interest. This is where timing, residence status, and valuation need attention before completion, not after.
Gifts and other disposals
A gift can count as a disposal. That surprises many people. If you give an asset to a friend, relative, or connected person, HMRC may use market value rather than the amount received. So tax on gains can arise with no actual proceeds. Gifts to a spouse or civil partner are usually treated more favourably, but separation, timing, and ownership records can change the answer.
What is CGT Paid On
You pay CGT on chargeable assets when the gain exceeds available reliefs and tax allowances. Common examples include second homes, buy-to-let property, shares outside ISAs, crypto assets, business assets, and personal possessions worth more than £6,000, except private cars. For crypto, there is one important point.
Swapping one token for another, such as BTC to ETH, is a taxable disposal even if no “cash” is withdrawn. Selling, exchanging, spending, or gifting crypto can create a taxable gain. Crypto records must show dates, values, fees, and tokens moved.
When you do not pay it
You do not pay CGT where the gain is covered by the annual exemption, where the asset is exempt, or where relief removes the charge. Your main home may qualify for Private Residence Relief. ISAs, some government securities, UK gilts, Premium Bonds, and private cars are usually outside CGT. Cash in sterling is also outside. Still, tax rules can change, and mixed-use assets can complicate a position quickly.
Exempt assets from CGT
Exempt assets include your main home where Private Residence Relief applies, stocks and shares isa investments, a shares isa, UK gilts, qualifying government bonds, private cars, and some personal possessions. Wasting assets are also important. These are items with a predictable life of less than 50 years. A luxury watch may be exempt, depending on the facts. Cars are usually exempt personally. Business vehicles are different.
Inherited Assets
You do not usually pay CGT simply because you inherit an asset. That sits closer to inheritance tax, not CGT. For capital gains tax purposes, the inherited asset is normally rebased to market value at the date of death. That becomes your starting cost. If you later sell it for more, only the growth after inheritance may be taxable. Keep probate valuations safe. They matter later.
Overseas Assests
A UK resident may be liable to capital gains tax on overseas assets, including foreign property, offshore funds, overseas shares, and crypto held on non-UK platforms. The foreign income and gains regime can affect some taxpayers, especially where residence, domicile, or remittance rules apply. From 6 april 2025, wider changes make cross-border planning more important. Tax on foreign income UK advice should sit beside CGT planning here.
If you’re abroad
If you are abroad and non-resident, you may still need to pay UK CGT on UK property or land. Temporary non-residence rules can also bring some disposals back into charge if you return to the UK. So leaving the country does not always remove the issue. UK assets, residence status, disposal date, and asset type must be reviewed together before assuming there is no tax liability.
How to Calculate Your Capital Gains Tax
The calculation starts with value received, then removes the cost of the asset and allowable costs. The formula is: [Disposal Price] – [Original Cost] – [Buying/Selling Fees] = [Gross Gain]. Then deduct the £3,000 allowance, where available, to reach the taxable gain.
Allowable costs can include solicitor fees, agent fees, broker fees, stamp duty, and some valuation costs. Improvement costs may also qualify if they added value and still exist in the asset. Repairs usually do not. That small distinction can change how much tax you might owe.
How Sale Proceeds Affect Capital Gains Tax
Sale proceeds are the starting point for most CGT calculations. Usually, that means the amount you receive when the asset is sold. But HMRC may use market value where an asset is gifted, sold cheaply, transferred to a connected person, or exchanged for something else. Crypto swaps work this way too. The tax you pay is calculated from the disposal value, not only from cash withdrawn or visible bank receipts.
Understanding Original Cost for Capital Gains Tax
Original cost usually means the amount paid to buy the asset. That includes the purchase price and some purchase-related costs, such as stamp duty or broker fees. But inherited, gifted, very old, or partly owned assets can be harder. For assets held before 31 March 1982, rebasing rules may apply. Without records, the calculation weakens. HMRC does not accept guesswork just because paperwork is inconvenient.
Which Property Improvement Costs Can You Claim?
Some improvement costs can reduce your gain. An extension, structural alteration, or permanent upgrade may qualify where it adds value and remains part of the property when sold. Ordinary repairs normally do not. Repainting, fixing broken items, or replacing like-for-like features is usually maintenance. Not capital improvement. Keep invoices, planning documents, and completion records. If the cost is challenged, a vague memory will not help.
Allowable Buying and Selling Costs for CGT
Allowable buying and selling costs reduce the gain when they relate directly to acquiring or disposing of the asset. Examples include solicitor fees, estate agent fees, broker commission, stamp duty, valuation costs, and certain professional charges. They are not the same as general running costs. For landlords or business owners, allowable expenses for self assessment must be separated from capital deductions.
Example of How a Capital Gain Is Calculated
Suppose a property sells for £300,000 after being bought for £250,000. Allowable legal and agent costs total £5,000. The gross gain is £45,000. Deduct the 2026/27 £3,000 allowance and the taxable gain is £42,000. The rate of capital gains tax then depends on income and asset type. A capital gains tax calculator can estimate the result, but accurate figures matter more than speed.
How Capital Gains Tax Works on Part Disposals
A part disposal happens when you sell only part of an asset. A section of garden, a strip of land, or part of a larger holding. The original cost must be apportioned between the part sold and the part retained. HMRC uses a formula based on disposal proceeds and remaining value. It is not instinctive. And not optional. The part sold needs its own cost figure before tax is calculated.
Example of a Partial Property Disposal Calculation
If land originally cost £160,000 and part is sold for £15,000, you do not deduct the full cost. If the retained land is worth £155,000 after the sale, the cost attributed to the part sold is £160,000 × £15,000 ÷ £170,000. That equals about £14,117. The gain is measured against that allocated cost, plus any allowable selling costs connected with that part.
Capital Gains Tax Relief for Small Land Disposals
Small land disposal relief may help when part of a land holding is sold for £20,000 or less and the proceeds are no more than 20% of the total value. Instead of treating the disposal as an immediate gain, an election may allow the proceeds to reduce the base cost of the remaining land. Useful, yes. But only where the conditions are met exactly.
Example of Small Part Disposal Relief in Practice
A landowner sells a small part of land for £5,000 while keeping the larger remaining holding. If the proceeds are within the £20,000 limit and no more than 20% of the total value, the landowner may elect for small part disposal treatment. The £5,000 then reduces the base cost of the retained land. That can defer tax on your share of the gain.
| Step | Action | Example (Property/Asset) |
| 1 | Disposal Price | £300,000 |
| 2 | Deduct Purchase Price | (£250,000) |
| 3 | Deduct Allowable Costs (Legal/Agent) | (£5,000) |
| 4 | Total Gain | £45,000 |
| 5 | Deduct Annual Allowance (2026/27) | (£3,000) |
| 6 | Taxable Gain | £42,000 |
What is the Capital Gains Tax Rate?
For 2026/27, most individual CGT gains are charged at 18% for basic rate taxpayers and 24% for higher or additional rate taxpayers. The lower rate applies only where your taxable income and gains remain within the basic rate band. Once your gains push you above that band, the excess is taxed at a higher rate.
Shares, crypto, other chargeable assets, and residential property broadly use the same 18% and 24% structure for individuals. Business Asset Disposal Relief is 18% from 6 April 2026, not 10%. Carried interest moves into the Income Tax framework from 6 April 2026, so carried interest gains need separate review.
| Asset Type | Basic Rate Taxpayer | Higher/Additional Rate Taxpayer |
| Shares, Crypto, and Other Assets | 18% | 24% |
| Residential Property | 18% | 24% |
| Business Asset Disposal Relief (BADR) | 18%* | 18%* |
When do You Pay Capital Gains Tax?
Payment deadlines depend on the asset sold. UK residential property is urgent. If CGT is due on a UK residential property disposal, you usually need to report and pay the capital gains tax within 60 days of completion. Not next January. Not when convenient. Completion.
For crypto, shares, business assets, and most other disposals, reporting is usually handled through a Self-Assessment Tax Return, with payment due by 31 January after the end of the tax year. HMRC also has HMRC’s ‘real time’ capital gains reporting option, sometimes called the ‘real time’ capital gains tax route or time’ capital gains tax service.
| Type of Asset Sold | Reporting Deadline | Payment Deadline |
| Residential Property | 60 Days from completion | 60 Days from completion |
| Crypto, Shares, Business Assets | 31 January after tax year | 31 January after tax year |
| Inherited Assets (if sold) | Depends on asset type (see above) | Depends on asset type (see above) |
How to Reduce your CGT bill?
Reducing CGT usually means planning before the disposal. Not afterwards. You can use the annual exemption, claim allowable costs, report capital losses, transfer assets to a spouse or civil partner, consider pension contributions, and hold future investments through tax-efficient wrappers.
But none of these should be forced. The investment, property, or business decision must still make sense. Also, the £3,000 allowance must be used by 5 April. If it is not used, it does not roll forward. It is lost. That one date can decide whether you overpay.
Use your allowances
Use the £3,000 Annual Exempt Amount before the tax year ends where it fits the wider plan. It cannot be carried forward after 5 April. Staged disposals may help spread total capital gains across more than one year, especially for investments or crypto. Still, do not sell a strong asset only for tax. First ask whether the disposal makes financial sense. Then check the tax impact.
Use your spouse’s allowance
Transfers between spouses or civil partners are usually made on a no gain, no loss basis. That can allow both annual allowances and tax bands to be used before a later sale. It may reduce the tax you pay where one partner has lower income or unused allowance. But legal ownership must genuinely transfer. Separation rules and timing can change everything. Paperwork matters more than people think.
Tweak your pension contributions
Pension contributions can sometimes reduce the amount of gain taxed at the higher rate by extending the basic rate band. They do not remove the gain. They may change the rate. This can be useful where taxable income is close to a threshold. Use an Income Tax Calculator to model the effect, then check contribution limits, annual allowance rules, access restrictions, and wider retirement planning.
Explore tax-efficient investments
Tax-efficient investments can reduce future CGT exposure. ISAs shelter eligible investments from CGT, while pensions may shelter growth and support retirement planning. For business owners, investment planning should sit beside Annual Accounts Preparation, Corporation Tax Returns, VAT Returns, Payroll Services, Audit Services, and making tax digital compliance. Tax Structuring services can connect these areas properly. That is better than fixing one tax problem while creating another.
Report any lossess
Capital losses can reduce gains in the same current tax year. Unused losses can often be carried forward and used against gains in future years, but they need to be claimed properly. Crypto losses, failed investments, and asset disposals below cost should not be ignored. A loss is not pleasant. Still useful. Without reporting it, you may lose the chance to reduce a later tax bill.
Don’t Overpay on Your Gains: Get a Professional Tax Review
A professional CGT review helps you calculate much tax you might owe before the disposal happens. That is the point. It can check asset values, taxable gain figures, allowable costs, residence status, property deadlines, crypto disposals, capital losses, current tax year timing, and whether you’ll pay 18% or 24%. For landlords, founders, investors, trustees, and crypto clients, Personal Tax Accountants can connect CGT with Property Taxes UK, tax on foreign income UK, and wider Services. Good advice also helps avoid relying on prompts such as help us improve gov.uk when deeper judgement is needed.
Planning should not stop at CGT. A full review may connect CGT with Corporation Tax Returns, VAT Returns, Annual Accounts Preparation, Payroll Services, Audit Services, and practical guidance on how to reduce tax bill for self-employed taxpayers. It may also compare real proceeds with taxable value, confirm if profits made from the sale are subject to capital gains tax, and review whether you need to pay sooner than expected. Tax is usually manageable when checked early. It becomes harder when guessed after completion
FAQs
Is the 2026/27 annual allowance the same for everyone?
No. Individuals, personal representatives, and trustees for disabled people receive a £3,000 Annual Exempt Amount for 2026/27. Other trustees receive £1,500. The old £6,000 and £12,000 figures should not be used. The reduced capital gains tax allowance means smaller disposals can now create reporting or payment issues.
Can I use my spouse’s allowance if I sell an asset?
Sometimes. You may transfer an asset to your spouse or civil partner before sale, usually on a no gain, no loss basis. They can then use their own allowance and tax band. This must be genuine, properly documented, and timed correctly. Separation or divorce can change the treatment.
Do I pay CGT if I give my crypto to a friend as a gift?
Yes, you may need to. HMRC normally treats a crypto gift to a friend as a disposal at market value. So even if no cash is received, gains tax is a tax on the value increase. Gifts to a spouse, civil partner, or charity can be different.
What happens if I sell an asset for a loss?
A capital loss can usually reduce gains in the same tax year. If losses exceed gains, unused losses may be carried forward to reduce later gains. You must claim and record them properly. Do not ignore failed crypto positions, shares sold below cost, or property losses where they are allowable.
Does CGT apply if I sell my car?
Personal cars are usually exempt from CGT, even where sold at a gain. Business vehicles can be different. A van, company car, or vehicle used in trade may involve capital allowances or business tax rules instead. So check how the vehicle was owned, used, claimed, and recorded.
I inherited a house in 2026, do I pay tax now?
Not usually for CGT. Inheriting the house itself does not usually create a CGT bill. The base cost is normally the market value at the date of death. If you later sell the property for more than that value, the growth after inheritance may be subject to CGT.
Can I deduct my solicitor and agent fees?
Yes, if the fees relate directly to buying or selling the asset. Solicitor fees, estate agent fees, broker commission, stamp duty, and some valuation costs can reduce the gain. General maintenance, repairs, and running expenses usually do not. Keep invoices because HMRC may ask for evidence later.
Is there a difference between the tax on property and the tax on shares?
Yes. Rates may be similar, but deadlines differ. UK residential property with CGT due must usually be reported and paid within 60 days of completion. Shares, crypto, and many other assets are normally reported through Self Assessment, with payment due by 31 January after the relevant tax year.
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