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.
Frequently Asked Questions
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What Is the Capital Gains Tax Allowance for 2026/27?
The Capital Gains Tax annual exempt amount for individuals is £3,000 for the 2026/27 tax year.Most trusts have a lower annual exempt amount of £1,500.Any gains above the applicable allowance may be subject to Capital Gains Tax.
When Do I Pay Capital Gains Tax?
Capital Gains Tax on UK residential property must be reported and paid within 60 calendar days of completion.Other taxable gains are usually reported through your annual Self Assessment tax return.Payment is generally due by 31 January following the end of the tax year.
What Assets Does CGT Apply To?
Capital Gains Tax may apply to second homes, rental properties, shares and certain business assets.It can also apply to valuable personal possessions worth more than £6,000, excluding private cars.The tax is generally calculated on the profit made rather than the total selling price.
How Can I Reduce my CGT Bill?
You may reduce your CGT bill by using your annual exempt amount and offsetting eligible capital losses.
You can also claim available reliefs, such as Private Residence Relief or Business Asset Disposal Relief.
Eligibility depends on your circumstances and the type of asset you dispose of.
What are the Capital Gains Tax Rates For 2026/27?
Individuals generally pay Capital Gains Tax at 18% or 24% on taxable gains.The applicable rate depends on their taxable income and whether they are basic or higher-rate taxpayers.Most trusts pay CGT at a rate of 24% for the 2026/27 tax year.
Do Limited Companies Pay Capital Gains Tax?
Limited companies do not usually pay Capital Gains Tax on profits made from selling business assets.Instead, chargeable gains are generally included in their taxable profits for Corporation Tax purposes.Companies must report these gains through their Company Tax Return (CT600).
What Costs Can I Deduct When Calculating Capital Gains Tax?
You may deduct eligible purchase, improvement and selling costs when calculating your taxable gain.These can include legal fees, estate agent fees and qualifying enhancement expenditure.You should keep invoices and records to support your calculations and claims.
What Information Is Needed to Report Capital Gains Tax?
You generally need the asset details, purchase and sale dates, and the original and selling prices.Records of eligible buying, improvement and selling costs are also required.These details help calculate the taxable gain and complete your HMRC reporting accurately.