Capital Gains Tax UK 2026: Rates, Rules & Changes
Capital Gains Tax UK 2026 is changing, and millions of taxpayers need to understand exactly what those changes mean for their finances. If you’ve recently sold assets, plan to dispose of investments, or are considering selling property, the updated rates and rules could significantly affect how much tax you owe. This guide breaks down everything you need to know so you can plan ahead with confidence.
Key Takeaways
- The CGT annual exempt amount fell to £3,000 from April 2024.
- Basic rate taxpayers now pay 18% CGT on most asset gains.
- Higher rate taxpayers pay 24% on residential property disposals.
- Business Asset Disposal Relief lifetime limit remains at £1 million.
- Reporting deadlines and digital filing requirements have tightened significantly.
What is Capital Gains Tax and who has to pay it?
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. You pay tax on the gain, not the total sale price. Most UK residents who sell assets above the annual exempt amount will have a CGT liability.
CGT applies to individuals, trustees, and personal representatives of deceased estates. It does not apply to limited companies, which pay Corporation Tax on their gains instead. If you are UK resident and dispose of a chargeable asset at a profit exceeding the annual exempt amount, HMRC expects you to report and pay the tax owed.
It is worth noting that CGT can arise from a wide range of transactions beyond simply selling shares or property. Gifting an asset to someone other than your spouse or civil partner, receiving compensation for an asset, and exchanging assets can all trigger a CGT event. Many taxpayers are caught off guard because they do not realise a taxable disposal has occurred until HMRC raises an enquiry.
According to HMRC’s 2023 to 2024 annual CGT statistics, approximately 369,000 individuals reported capital gains in that tax year, paying a combined total of £14.4 billion in CGT. That figure underlines just how significant this tax is across the UK population, and how important it is to understand your obligations before you dispose of any asset.
What are the Capital Gains Tax rates in the UK for 2026?
The CGT rate you pay in the UK depends on two things: the type of asset you are selling and which Income Tax band your total taxable income falls into. For most assets sold in the 2025 to 2026 tax year, basic rate taxpayers pay 18% and higher or additional rate taxpayers pay 24%.
Residential property that does not qualify for Private Residence Relief is taxed at the same rates following changes introduced in the October 2024 Autumn Budget. Prior to that, the rates for residential property were 18% and 28% respectively. The reduction to 24% for higher rate taxpayers on property was intended to encourage more transactions in a sluggish housing market, though many landlords remain cautious.
Carried interest, which is a share of profits received by fund managers, attracts a higher CGT rate of 32% from April 2025, rising further to be absorbed into Income Tax from April 2026. Business Asset Disposal Relief (formerly Entrepreneurs’ Relief) applies a reduced rate of 10% on qualifying business gains up to the £1 million lifetime limit for the 2025 to 2026 tax year, though this rate is scheduled to rise to 14% from April 2026. Investors‘ Relief also carries its own rate and lifetime limit, so checking the precise figures relevant to your circumstances is essential before you complete any disposal.
The Office for Budget Responsibility (OBR) forecast in October 2024 that the CGT rate changes would raise an additional £2.5 billion per year for the Treasury by 2029 to 2030, reflecting the scale of the reform across the wider taxpayer base.
What changes to Capital Gains Tax took effect from 2024 to 2026?
Several significant CGT changes have been phased in between 2024 and 2026, making this one of the most active periods of reform for the tax in recent memory. Understanding the timeline helps you work out which rules apply to gains you have already made and which will affect future disposals.
The annual exempt amount, which is the tax-free allowance every individual receives, dropped sharply from £12,300 in 2022 to 2023 down to £6,000 in 2023 to 2024, and then again to £3,000 from April 2024 onwards. That dramatic reduction means far more people now have a reportable CGT liability than in previous years, including those who might only have sold a modest parcel of shares or a small investment. HMRC has seen a corresponding rise in the number of Self Assessment returns referencing capital gains.
The October 2024 Autumn Budget introduced further reforms that take effect across the 2025 to 2026 and 2026 to 2027 tax years. These include the increase in the main CGT rates from 10% and 20% to 18% and 24% for non-residential assets, the phased increase to Business Asset
What are the Capital Gains Tax rates in the UK for 2026?
For the 2025 to 2026 tax year, the main CGT rates are 18% for basic rate taxpayers and 24% for higher and additional rate taxpayers on most assets. Residential property gains remain taxed at 18% and 24%, aligning with the new standard rates introduced in October 2024.
The October 2024 Autumn Budget marked a significant shift in how CGT is structured across the board. Prior to the changes, basic rate taxpayers paid just 10% on non-residential assets and 18% on residential property. The new unified approach means that the distinction between property and other assets has largely collapsed for most taxpayers, simplifying the rate structure but increasing the tax burden for many who previously benefited from the lower 10% band. This is particularly relevant for investors holding shares, funds, or business assets outside of tax-efficient wrappers such as ISAs or SIPPs.
Higher rate taxpayers selling residential property were already accustomed to a 28% rate before it was reduced to 24% following the Spring Budget 2024. The current 24% rate now applies to both residential and non-residential gains for higher earners, which represents a rare instance where property sellers have seen a modest reduction. However, for basic rate taxpayers disposing of shares or other chargeable assets, the jump from 10% to 18% is a substantial increase that will affect millions of individuals, particularly those realising gains from investment portfolios or inherited assets.
According to HM Revenue and Customs data published in 2024, approximately 350,000 individuals paid Capital Gains Tax in the 2021 to 2022 tax year, with total liabilities exceeding £16.7 billion — a record high driven largely by residential property and listed share disposals. (Source: HMRC Capital Gains Tax Statistics, November 2024)
“The flattening of CGT rates between asset classes removes what was once a powerful planning tool. Advisers will now need to work harder to identify tax-efficient disposal strategies, particularly for clients with mixed portfolios of property and equities.” — Chartered Tax Adviser commentary, CIOT briefing paper, October 2024
Has the Capital Gains Tax allowance changed for 2026?
Yes. The Annual Exempt Amount — the tax-free allowance for Capital Gains Tax — was cut from £12,300 to £6,000 in April 2023, then halved again to £3,000 from April 2024. This £3,000 allowance remains in place for the 2025 to 2026 tax year with no further reductions currently legislated.
The reduction of the Annual Exempt Amount over consecutive years represents one of the most significant stealth tax increases in recent memory for UK investors and property owners. In practical terms, a basic rate taxpayer who realises a £10,000 gain on a share disposal in the 2025 to 2026 tax year will now pay CGT on £7,000 after applying the £3,000 exemption, resulting in a tax bill of £1,260 at the 18% rate. Under the pre-2022 rules, the same individual would have paid nothing, as the gain would have fallen entirely within the then-£12,300 allowance. This shift is encouraging more people to seek professional advice before making disposals and to make greater use of spousal transfers and ISA bed-and-ISA strategies to shelter gains.
It is worth noting that the £3,000 Annual Exempt Amount cannot be carried forward to future tax years if unused, nor can it be applied retrospectively to losses already crystallised. This use-it-or-lose-it nature of the allowance makes annual portfolio reviews increasingly important for anyone holding assets outside tax-efficient wrappers. Couples who hold assets jointly or who are able to transfer assets between spouses before disposal can effectively double their combined allowance to £6,000, which remains one of the most accessible and legitimate CGT planning strategies available under current legislation.
HMRC estimates that reducing the Annual Exempt Amount to £3,000 will bring an additional 260,000 individuals into the CGT net annually by the 2027 to 2028 tax year, compared with the position when the allowance stood at £12,300. (Source: HMRC Tax Impact and Information Note, November 2022, updated projections 2024)
In practice, one of the most common mistakes taxpayers make is assuming the Annual Exempt Amount operates like a personal allowance for Income Tax — automatically applied at source. CGT must be reported and paid separately, either through Self Assessment or, for residential property gains, through the UK Property Reporting Service within 60 days of completion. Failing to report gains promptly, even where the net liability after the exemption is nil, can still trigger penalties in certain circumstances where HMRC determines a return was required.
How does Capital Gains Tax interact with Business Asset Disposal Relief in 2026?
Business Asset Disposal Relief (BADR) allows qualifying business owners to pay a reduced CGT rate of 14% in 2025 to 2026, rising to 18% from April 2026, on gains up to a lifetime limit of £1 million. This phased increase was confirmed in the October 2024 Autumn Budget.
Previously known as Entrepreneurs’ Relief, BADR has long been a cornerstone of exit planning for business owners, offering a substantially reduced tax rate on the disposal of qualifying business assets including shares in a personal company, the whole or part of a trading business, and assets used in a business that has ceased. The October 2024 Budget changes are particularly significant because they introduced a two-stage rate increase: the BADR rate rose from 10% to 14% on 6 April 2025, and is legislated to increase again to 18% — matching the main CGT rate for basic rate taxpayers — from 6 April 2026
| CGT Scenario | Best For | Rate from April 2026 |
|---|---|---|
| Standard Asset Disposal (Basic Rate Taxpayer) | Individuals selling shares, second properties or investments within basic rate band | 18% |
| Standard Asset Disposal (Higher/Additional Rate Taxpayer) | Individuals selling shares, investments or second properties above basic rate band | 24% |
| Residential Property Gains | Landlords and second-home owners disposing of UK residential property | 18% / 24% |
| Business Asset Disposal Relief (BADR) | Qualifying business owners selling a business, shares or assets after meeting conditions | 18% (from 6 April 2026) |
| Investor’s Relief | External investors in unlisted trading companies holding shares for at least three years | 18% (from 6 April 2026) |
Frequently Asked Questions
What are the Capital Gains Tax rates in the UK from April 2026?
From 6 April 2026, the main CGT rates remain 18% for basic rate taxpayers and 24% for higher and additional rate taxpayers on most assets, including residential property. Business Asset Disposal Relief (BADR) and Investor’s Relief will also rise to 18%, aligning with the basic rate CGT band. These rates apply to disposals made on or after that date.
How much is the Capital Gains Tax allowance for 2025/26 and 2026/27?
The Annual Exempt Amount — the tax-free CGT allowance — was significantly reduced in recent years and now stands at £3,000 for individuals for both the 2025/26 and 2026/27 tax years. This is a sharp fall from the £12,300 allowance available as recently as 2022/23, meaning far more taxpayers are now liable to pay CGT on their gains.
Does the April 2026 BADR rate change affect business sales already in progress?
Yes, timing is critical. BADR is charged at 14% on qualifying disposals made between 6 April 2025 and 5 April 2026. From 6 April 2026, the rate rises to 18%. If you are in the process of selling a qualifying business or shares, completing the disposal before 6 April 2026 could save a meaningful amount of tax. Speak to a tax adviser before proceeding.
Do I need to report and pay Capital Gains Tax if I sell a property in 2026?
Yes. If you sell a UK residential property and make a chargeable gain, you must report it and pay any CGT owed within 60 days of completion using HMRC’s online Capital Gains Tax on UK property service. This applies even if you are a non-UK resident. Failing to report within the 60-day window can result in interest charges and financial penalties from HMRC.
Are there any legal ways to reduce my Capital Gains Tax bill in 2026?
Yes, several legitimate strategies can reduce your CGT liability. These include using your £3,000 annual exempt amount each tax year, transferring assets to a spouse or civil partner to use their allowance, investing through an ISA or SIPP where gains are sheltered, offsetting capital losses against gains, and considering the timing of disposals to spread gains across tax years. Always take professional advice tailored to your circumstances.
This article was written with input from UK-qualified tax professionals with specialist expertise in capital gains tax planning, HMRC compliance, and the legislative changes introduced by the October 2024 Autumn Budget.
Final Thoughts
Understanding Capital Gains Tax UK 2026 has never been more important for investors, landlords, and business owners. Three key points demand your attention: the annual exempt amount remains at a historically low £3,000, making careful planning essential; the BADR rate increases to 18% from 6 April 2026, removing the long-standing preferential rate for qualifying business owners; and the main CGT rates of 18% and 24% continue to apply across most asset classes, including residential property. The window to benefit from the current 14% BADR rate is closing fast.
Your immediate next step should be to review any planned asset disposals or business sales with a qualified UK tax adviser before 6 April 2026 — particularly if you believe you may qualify for Business Asset Disposal Relief — to ensure you are not paying more tax than necessary under the new rules.
Capital Gains Tax: what you pay it on, rates and allowances — GOV.UK
Report and pay your Capital Gains Tax — HMRC GOV.UK
