Capital Gains Tax (CGT) is the tax you pay on the profit when you sell something that’s gone up in value. In the UK, it applies to second properties, shares, business assets, and even valuable personal possessions worth over £6,000. Your main home is normally exempt — which is a relief, because property is where most of the gains are.
Current CGT Rates (2025/26)
Rates depend on your income and what you’re selling:
- Residential property: 18% for basic-rate taxpayers, 24% for higher and additional-rate
- Other assets (shares, business stuff, valuables): 10% basic-rate, 20% higher-rate
Your CGT rate is worked out by adding your gains to your income. If the combined total pushes you into the higher-rate band, part of the gain might be taxed at the lower rate and the rest at the higher rate. The calculator on gov.uk is genuinely useful for working this out.
Annual Exempt Amount
Everyone gets a CGT-free allowance each tax year. For 2025/26, it’s £3,000. That’s a massive drop from £12,300 in 2022/23 — it was halved to £6,000 in 2023/24 and halved again in 2024/25. You can’t carry unused allowance forward, so use it or lose it.
How to Work Out Your Gain
The basic formula is:
Gain = What you sold it for − What you paid − Allowable costs − Annual exempt amount
Allowable costs include:
- Purchase price and buying costs (stamp duty, solicitor fees at purchase)
- Improvement costs (extensions, renovations — but not maintenance or repairs)
- Selling costs (estate agent fees, solicitor fees at sale)
For assets held since before March 1982, you use the market value on 31 March 1982 instead of the original price. Yes, some people are still dealing with that.
Reporting and Payment Deadlines
Sold a UK residential property with CGT to pay? You must report and pay within 60 days of completion using HMRC’s “Capital Gains Tax on UK property” online service. This is separate from your annual self-assessment (though you report it there too).
For shares and other non-property assets, you report and pay through self-assessment by 31 January after the end of the tax year. Less urgent, but don’t forget.
Legitimate Ways to Pay Less CGT
- Use your annual exempt amount wisely — sell across the 5 April tax year boundary to use two years’ allowances
- Transfer assets to your spouse — transfers between spouses are CGT-free, letting you use both partners’ allowances and potentially lower rate bands
- Offset losses — capital losses from other sales in the same or previous years can be set against gains
- Business Asset Disposal Relief (used to be called Entrepreneurs’ Relief) — 10% rate on the first £1 million of qualifying business gains
- Investors’ Relief — 10% on gains from shares in unlisted trading companies, up to £10 million lifetime
- ISAs and pensions — gains inside ISAs and pensions are completely CGT-free
- EIS and SEIS — gains on qualifying Enterprise Investment Scheme shares are CGT-free if held for 3+ years
Calculate Your CGT
Our free Capital Gains Tax calculator works out your liability on property and share sales, taking your income level, available reliefs, and the annual exempt amount into account. Better to know before you sell.