Capital Gains Tax Rates and Allowances

When you sell something that's increased in value — whether that's a buy-to-let property, shares, or business assets — you may need to pay Capital Gains Tax (CGT) on the profit you make. The good news is that you have a tax-free allowance each year, and the rate you pay depends on what you're selling and how much other income you have.

What is Capital Gains Tax?

Capital Gains Tax is a tax on the profit (the 'gain') you make when you sell or dispose of an asset that has increased in value. It's the gain that's taxed, not the total amount you receive.

For example, if you bought a painting for £5,000 and sold it for £25,000, your gain is £20,000 (£25,000 minus £5,000). You would only pay tax on this £20,000 gain, and only if your total gains for the year exceed your tax-free allowance.

'Disposing of' an asset means:

• Selling it
• Giving it away as a gift or transferring it to someone else
• Swapping it for something else
• Getting compensation for it, such as an insurance payout if it's been lost or destroyed

The annual tax-free allowance

You only pay Capital Gains Tax on gains above your annual tax-free allowance, known as the Annual Exempt Amount.

For the 2025/26 tax year, the allowance is:

• £3,000 for individuals
• £1,500 for most trusts

This allowance has reduced significantly in recent years. It was £12,300 in 2022/23, then £6,000 in 2023/24, and has been £3,000 since 2024/25.

If your total taxable gains for the year are below £3,000, you don't need to pay any Capital Gains Tax. The tax year runs from 6 April to 5 April the following year.

What assets are subject to Capital Gains Tax?

You pay Capital Gains Tax when you dispose of:

• Property that's not your main home — such as buy-to-let properties or second homes
• Your main home in certain circumstances — if you've let it out, used it for business, or it's very large
• Personal possessions worth £6,000 or more (apart from your car)
• Shares that are not held in an ISA or PEP
• Business assets
• Cryptoassets such as cryptocurrency or bitcoin

These are known as 'chargeable assets'.

If you own an asset jointly with someone else, you pay Capital Gains Tax on your share of the gain.

Assets you don't pay Capital Gains Tax on

You don't pay Capital Gains Tax on:

• Your car
• Assets held in ISAs or PEPs
• UK government gilts and Premium Bonds
• Betting, lottery, or pools winnings
• Assets you give to your spouse, civil partner, or charity (with certain exceptions)
• Carried interest (from 6 April 2026 onwards — this will be taxed as income instead)

Capital Gains Tax rates for 2025/26

The rate you pay depends on two things: your total taxable income for the year and the type of asset you're selling.

For most assets (shares, personal possessions, business assets)

If you're a basic rate taxpayer, you pay 18% on gains.

If you're a higher or additional rate taxpayer, you pay 24% on gains.

To work out which rate applies, you need to calculate your total taxable income first. If adding your gains to your income pushes you into a higher tax band, you'll pay 18% on the portion that falls within the basic rate band and 24% on the rest.

For carried interest gains

Carried interest is treated differently. For the 2025/26 tax year, gains from carried interest are taxed at 32% for individuals and personal representatives.

For gains qualifying for Business Asset Disposal Relief or Investors' Relief

If your gains qualify for Business Asset Disposal Relief (formerly known as Entrepreneurs' Relief) or Investors' Relief, you pay a reduced rate of 14% for the 2025/26 tax year.

For trustees and executors

Trustees pay a flat rate of 24% on gains.

Personal representatives (executors or administrators of someone's estate) also pay 24% on most gains, or 32% on carried interest gains.

Special situations

Gifts to your spouse or civil partner

You don't pay Capital Gains Tax when you give or sell an asset to your husband, wife, or civil partner, unless you were separated and didn't live together at all during that tax year, or you gave them goods for their business to sell on.

However, if your spouse or civil partner later sells the asset, they may need to pay Capital Gains Tax. Their gain will be calculated based on the difference between the original purchase price (when you first owned it) and the sale price.

Gifts to charity

You don't pay Capital Gains Tax on assets you give away to charity. However, if you sell an asset to a charity for more than you paid but less than its market value, you may need to pay tax based on the amount the charity actually pays you.

Executors and personal representatives

If you're dealing with a deceased person's estate, you may be entitled to the full annual exempt amount (£3,000) during the administration period. You can claim this allowance for the tax year in which the death occurred and the following two tax years.

When you need to report and pay

You must report and pay Capital Gains Tax if your total taxable gains are above the £3,000 allowance.

Even if your gains are below the allowance, you still need to report them in your Self Assessment tax return if you're registered for Self Assessment and the total amount you sold the assets for was more than £50,000 (for 2023/24 onwards).

If you sold a UK residential property, you need to report and pay any Capital Gains Tax due within 60 days of completion using a Capital Gains Tax on UK property account.

Reducing your tax bill

You may be able to reduce the amount of Capital Gains Tax you pay by:

• Deducting allowable losses from previous years
• Claiming reliefs such as Business Asset Disposal Relief or Private Residence Relief
• Using your annual exempt amount against the gains charged at the highest rates first

The availability of reliefs depends on the type of asset you're selling.

Sources

• Capital Gains Tax: what you pay it on, rates and allowances
• Capital Gains Tax rates and allowances

This article provides general guidance based on current HMRC rules. For advice specific to your situation, speak to your accountant.