Capital Gains Tax Rates and Allowances
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Capital gains tax on asset sales
Capital gains tax (CGT) is charged in the UK when you sell or otherwise dispose of certain assets at a profit. It covers things like property that is not your main home, shares, investments and valuable items. The tax applies to the profit you make (the ‘gain’), not to the full sale price. This guide covers what CGT is, when it applies, how to work it out, and which allowances and reliefs you may be able to claim. Knowing how CGT works helps you plan ahead, report gains accurately and stay on the right side of HMRC.
What is Capital Gains Tax?
Capital gains tax is a tax on the profit you make when you sell or dispose of an asset that has risen in value. You are taxed on the gain, not on the total amount you receive. In the UK, CGT commonly applies to assets such as property (other than your main home), shares, investments and valuable personal items. The rate you pay depends on whether you are a basic or higher-rate taxpayer and on the type of asset sold. Understanding how CGT works, when it applies, and which allowances and reliefs are available is key to managing your tax bill and getting the most from your profits.
Getting Started with Capital Gains Tax
Understanding Capital Gains Tax
Before selling or giving away an asset, understand how Capital Gains Tax (CGT) might apply. Knowing what counts as a chargeable gain, how to calculate your profit, and when to report and pay can help you avoid unexpected tax bills. CGT applies to individuals, trustees and personal representatives, while companies pay Corporation Tax on their capital gains instead of CGT.
Calculating Gains and Keeping Records
Check your available annual tax-free allowance, known as the annual exempt amount. Companies do not receive this allowance. Keep clear records of the asset’s purchase price and any allowable buying, selling or improvement costs. For individuals, taxable gains are considered alongside taxable income to determine which tax rates apply and how much falls within the basic rate band for CGT.
Tax Reliefs and Professional Advice
Reliefs such as Private Residence Relief, Investors’ Relief and Business Asset Disposal Relief may reduce your tax bill. Each relief has specific eligibility requirements and conditions, so check whether your disposal qualifies before making a claim. Professional advice can help you understand the available options, calculate your liability, meet reporting deadlines and plan future asset disposals with greater financial confidence.
| Individuals | 2026/27 | 2025/26 |
|---|---|---|
| Exemption | £3,000 | £3,000 |
| Standard rate | 18% | 18% |
| Higher rate | 24% | 24% |
The higher rate applies to higher rate and additional rate taxpayers.
| Trusts | 2026/27 |
|---|---|
| Exemption | £1,500 |
| Rate | 24% |
Who Qualifies for Capital Gains Tax?
Individuals and Taxable Assets
Individuals may pay Capital Gains Tax when selling or disposing of certain assets at a profit. These can include second properties, shares, investments and personal possessions worth more than £6,000. Private cars are generally exempt from Capital Gains Tax liability.
Businesses, Trusts and Estates
Sole traders and business partners may pay CGT on gains from business assets. Trustees and personal representatives managing a deceased person’s estate may also be liable. Limited companies generally pay Corporation Tax on capital gains rather than Capital Gains Tax.
Tax Rates and Available Reliefs
Your income, tax status and asset type affect how much CGT you owe and which rates apply. Your main home may qualify for the Private Residence Relief, while available allowances and other reliefs can reduce the amount of your taxable gains.
Report and Pay Capital Gains Tax
CGT is paid through your personal or business tax return, depending on who made the gain.
Individuals
Self Assessment Tax
Individuals generally report Capital Gains Tax through their annual Self Assessment tax return, providing details of asset disposals, gains and any reliefs claimed. Keeping accurate records helps ensure correct calculations and timely reporting. Some disposals, particularly UK residential property, may require a separate report and payment before the annual return is due.
Reporting Criteria
Report taxable gains that exceed your available annual CGT allowance, including gains from selling UK property where reporting is required. Keep records of the sale proceeds, purchase price and allowable costs to calculate your gain accurately and meet the relevant reporting deadlines.
The Sixty Day Rule
UK residents selling residential property with Capital Gains Tax to pay must report the disposal and pay the tax within 60 calendar days of completion. This deadline applies to sales completed on or after 27 October 2021. Reporting is normally completed online through a Capital Gains Tax on UK property account.
Businesses, Trusts, and Personal Representatives
Business & Trust Gains
Gains made by limited companies are generally reported through Company Tax Returns and subject to Corporation Tax. Trustees report taxable gains through Trust and Estate Tax Returns, while sole traders and business partners usually report their gains through individual Self Assessment returns.
Estate Representatives
Personal representatives are responsible for reporting taxable gains arising when estate assets are sold during administration. They should maintain clear records of asset valuations, sale proceeds and allowable costs to calculate the estate’s gains and establish any tax payable.
Estate Reporting Methods
The reporting method depends on the estate’s circumstances. A Trust and Estate Tax Return or HMRC’s informal reporting arrangements may apply. UK residential property disposals can also require a separate CGT report and payment within the applicable deadline.
What Qualifies for Capital Gains Tax
Property and Investments
Capital Gains Tax may apply when you sell second homes, buy-to-let properties or investments at a profit. Shares held outside an ISA or pension can also be taxable, depending on your gains, available allowance and any reliefs you qualify for.
Business Assets and Personal Possessions
Selling business assets, such as land, buildings or equipment, may create taxable gains. Certain personal possessions sold for more than £6,000 can also fall within CGT rules, although exemptions and special rules apply. Private cars are generally exempt.
Exempt Assets and Transfers
Your main home may qualify for Private Residence Relief, while gains on investments held within an ISA are generally exempt. Transfers to a spouse or civil partner usually do not trigger CGT when you are living together, subject to applicable conditions.
What You'll Need To Report Capital Gains
When reporting CGT, you will need details of the asset sold, including its type, acquisition date and sale date, along with the sale price and original purchase price. You should also provide details of costs linked to buying, improving or selling the asset, such as legal fees or stamp duty, and calculations showing your gain and any reliefs claimed. Have a payment method ready to pay any tax due by the deadline.
Keep Good Records
Documentation Basics
Save all contracts and receipts since HMRC can request proof of allowable costs.
Payment Optimization
Good records help make sure you do not pay more tax than is necessary this year.
Streamlining Reports
Maintaining evidence makes the whole reporting process much simpler for you now.