How UK Capital Gains Tax Works

Capital Gains Tax (CGT) is charged when you sell — or otherwise dispose of — an asset for more than you paid for it. Common triggers: selling a second home or buy-to-let, selling shares held outside an ISA, gifting an asset to someone other than your spouse, or selling all or part of a business. Your main home is usually exempt under Private Residence Relief, and shares inside an ISA or pension are completely sheltered from CGT.

The October 2024 rate alignment

Until 30 October 2024, main CGT rates (on shares and other non-property gains) were 10% for basic-rate taxpayers and 20% for higher-rate. The Autumn Budget 2024 raised them to 18% and 24% — matching the rates that already applied to residential property since 2010. So as of 2026/27 (and unchanged from 2025/26), all standard CGT — whether on a buy-to-let, a share portfolio, or other assets — is taxed at the same 18%/24% split, determined by whether the gain falls in your remaining basic-rate band.

The £3,000 allowance — and why it matters less now

Each individual gets a £3,000 annual exempt amount — gains up to this level pay no CGT. It's frozen at £3,000 until at least April 2031. For context: the allowance was £12,300 in 2022/23, then cut to £6,000 (2023/24), then £3,000 (2024/25 onwards). For couples disposing of a jointly-owned asset, both partners' allowances apply, sheltering £6,000 of gain.

Basic vs higher rate determination

CGT bands are determined by stacking the gain on top of your income. We work out how much of the £37,700 basic-rate band you have left after annual income, tax the gain up to that amount at the lower rate (18%), and tax the rest at the higher rate (24%). A taxpayer earning £40,000 has £10,270 of basic-rate room. A £92,000 taxable gain would split: £10,270 at 18% (£1,848.60) plus £81,730 at 24% (£19,615.20) — a total of £21,463.80.

Special rules: residential property and BADR

Residential property gains (second homes, buy-to-lets) attract a 60-day reporting deadline — you must file the Property CGT return and pay the tax within 60 days of completion. Business Asset Disposal Relief (formerly Entrepreneurs' Relief) taxes qualifying business sales at a flat 18% for 2026/27 (raised from 14% on 6 April 2026) — subject to a £1,000,000 lifetime limit. ISA-held shares are completely exempt from CGT and don't need to be reported.

What changed on 6 April 2026

Main CGT rates (18%/24%) and the annual exempt amount (£3,000) carried over from 2025/26 unchanged. The notable shift was BADR: the flat rate stepped up from 14% to 18% on disposals on or after 6 April 2026 — a meaningful increase if you sold a qualifying business after that date. The £1,000,000 lifetime limit is unchanged. Switch the calculator's tax year toggle to 2025/26 to model a disposal that completed in the previous tax year.