What is Capital Gains Tax?
CGT is a tax on the profit you make when you sell or dispose of an asset that has increased in value. It commonly applies to property that isn’t your main home, shares, investments and valuable personal items. The rate depends on whether you’re a basic or higher-rate taxpayer.
Who pays Capital Gains Tax
- Individuals on second homes, shares, investments and personal possessions worth more than £6,000. Private cars are generally exempt.
- Sole traders and business partners on gains from business assets.
- Trustees and personal representatives.
- Limited companies pay Corporation Tax on capital gains rather than CGT.
Rates and allowances
Individuals
| Individuals | 2026/27 | 2025/26 |
|---|---|---|
| Exemption | £3,000 | £3,000 |
| Standard rate | 18% | 18% |
| Higher rate | 24% | 24% |
The higher rate applies to higher and additional rate taxpayers.
Trusts
| Trusts | 2026/27 |
|---|---|
| Exemption | £1,500 |
| Rate | 24% |
Companies don’t receive the annual exempt amount. For individuals, taxable gains are added to taxable income to decide which rates apply.
Tax reliefs
Reliefs that may reduce your bill include Private Residence Relief, Investors’ Relief and Business Asset Disposal Relief. Each has specific eligibility requirements.
Reporting and paying Capital Gains Tax
Individuals generally report CGT through their annual Self Assessment return. UK residents selling residential property with CGT to pay must report and pay within 60 calendar days of completion, usually through a CGT on UK property account.
- Companies report gains on their Company Tax Return and pay Corporation Tax.
- Trustees report through Trust and Estate Tax Returns.
- Personal representatives report gains on estate assets sold during administration.
You’ll need the asset type, acquisition and sale dates, sale and purchase prices, buying, improving and selling costs, and your calculations.
FAQs
Frequently asked questions
What is the Capital Gains Tax allowance for 2026/27?
£3,000 for individuals and personal representatives, and £1,500 for most trusts.
When do I pay Capital Gains Tax?
CGT on residential property must be reported and paid within 60 days of the sale. Other gains are usually paid through Self Assessment by 31 January after the tax year ends.
What assets does CGT apply to?
Second homes, rental properties, shares not in an ISA or pension, business assets, and valuable items worth more than £6,000, excluding cars.
How can I reduce my CGT bill?
Use your annual exempt amount, offset losses and claim reliefs such as Private Residence Relief or Business Asset Disposal Relief.