Capital Gains Tax (CGT) affects thousands of UK taxpayers every year from landlords selling a buy-to-let property to business owners exiting a company. Yet it remains one of the most misunderstood taxes around. This guide answers the questions people actually search for, with every rate and threshold verified directly from HMRC and GOV.UK as of June 2026.

What Is Capital Gains Tax and Do I Have to Pay It?

Capital Gains Tax is a tax on the profit you make when you sell, give away, or otherwise dispose of an asset that has gone up in value. It is the gain that is taxed not the full amount you receive.

You may need to pay CGT if you have disposed of any of the following:

• A second property or buy-to-let (residential property that is not your main home)
• Shares or investments held outside an ISA or pension
• Cryptocurrency
• Business assets, including goodwill
• Personal possessions worth more than £6,000 (other than your car)
• Land

CGT applies to individuals, trustees, and personal representatives. If you run a limited company, gains made by the company are subject to Corporation Tax- not CGT.

How Much Capital Gains Tax Will I Pay in 2025/26 and 2026/27?

The rate you pay depends on your total taxable income and the type of asset. Following the October 2024 Budget, CGT rates on shares and most other assets were aligned with the residential property rates. For 2025/26 and 2026/27 the rates are:

Asset Type	Basic Rate Taxpayer	Higher / Additional Rate Taxpayer
Residential property (not your main home)	18%	24%
Shares, crypto, and most other assets	18%	24%
Business assets — BADR rate (2025/26)	14% flat (up to £1m lifetime limit)
Business assets — BADR rate (from 6 April 2026)	18% flat (up to £1m lifetime limit)

If you are a basic rate taxpayer but your gain-when added to your income-pushes you into the higher rate band, you pay 18% on the portion within the basic rate band and 24% on the rest.

Worked example: You earn £35,000 salary. Your remaining basic rate band is £50,270 − £35,000 = £15,270. You sell shares and make a gain of £25,000. After your £3,000 Annual Exempt Amount, your taxable gain is £22,000. The first £15,270 is taxed at 18% (£2,748.60). The remaining £6,730 is taxed at 24% (£1,615.20). Total CGT: £4,363.80.

What Is the Capital Gains Tax Allowance for 2025/26?

Every individual has a tax-free allowance each year called the Annual Exempt Amount (AEA). For 2025/26 and 2026/27 this is £3,000 per person. You only pay CGT on gains above this amount.

Key things to know about the AEA:

• It is use it or lose it — it cannot be carried forward to the next tax year
• Married couples and civil partners each have their own £3,000 ,a combined £6,000 between them
• For most trustees the AEA is £1,500
• The AEA has dropped significantly-it was £12,300 as recently as 2022/23, meaning far more people now have a CGT liability than before

Planning point: If you are planning to sell multiple assets, consider spreading disposals across two tax years to make use of two separate AEAs — £3,000 this year and £3,000 next year — potentially saving you up to £720 in CGT at the basic rate or £960 at the higher rate.

Do I Pay Capital Gains Tax When I Sell My House?

In most cases, no. Your main home is protected by Private Residence Relief (PRR), which means if you have lived in the property as your only or main home throughout your entire ownership, you will owe no CGT when you sell it.

However, you may have a partial CGT liability if:

• You let out all or part of your home at any point during ownership
• You used a room or area exclusively for business (not just working from home)
• The grounds are over 0.5 hectares (about 1.2 acres)
• You have been absent from the property — only the final 9 months of ownership are automatically treated as a qualifying period of residence
• You own two properties and HMRC does not accept your nomination of which is your main home

If you sell a second home, buy-to-let, or inherited property, CGT almost certainly applies on any gain made above your £3,000 allowance.

How Long Do I Have to Pay Capital Gains Tax After Selling a Property?

This is one of the most important deadlines in UK tax — and one that catches many people out because it is far shorter than the usual Self Assessment deadline.

If you sell a UK residential property and CGT is due, you must report and pay within 60 days of the completion date — not at the end of the tax year. You do this through HMRC’s online UK Property Disposal service using your Government Gateway account.

Miss this 60-day deadline and HMRC will issue automatic penalties — starting at £100 and increasing the longer you leave it, plus interest on the unpaid tax. This deadline applies even if you normally file a Self Assessment return. You must still complete the 60-day return separately.

For all other assets -shares, business assets, crypto -you report through your Self Assessment tax return. For the 2025/26 tax year, this deadline is 31 January 2027.

How Do I Report Capital Gains Tax to HMRC?

There are two routes depending on the asset:

Selling a UK Residential Property

Use HMRC’s UK Property Disposal online service. You will need a Capital Gains Tax on UK Property account -create one through your Government Gateway login. Report and pay within 60 days of completion.

Selling Shares, Business Assets, Crypto, or Other Assets

Report through your Self Assessment tax return (SA108 Capital Gains Summary pages) for the tax year in which the disposal happened. You must complete the CGT pages if:

• Your total disposal proceeds exceeded £50,000
• Your gains before losses exceeded the £3,000 Annual Exempt Amount
• You want to claim a capital loss

You can also use HMRC’s real-time CGT service to report and pay during the tax year rather than waiting until January. If using this route for 2025/26 disposals, report by 31 December 2026 and pay by 31 January 2027.

Can I Legally Reduce My Capital Gains Tax Bill?

Yes, and there are several well-established, HMRC-approved ways to do it. None of these are loopholes; they are reliefs and allowances built into the tax system. The key is planning ahead before you make a disposal, not after.

Use Both Spouses’ Allowances

Transfers between spouses and civil partners are tax-free for CGT purposes. This means you can transfer an asset to your partner before selling, so both of you can use your own £3,000 AEA — effectively doubling the tax-free amount to £6,000 — and potentially utilising a lower tax rate if one of you pays basic rate.

Put Investments Inside an ISA or Pension

Gains made within a Stocks and Shares ISA or a pension wrapper are completely CGT-free. You can invest up to £20,000 per year in ISAs. If you hold investments outside these wrappers generating gains, speak to an adviser about whether restructuring them makes sense.

Offset Your Capital Losses

Capital losses in the same tax year reduce your taxable gains before CGT is calculated. If your losses exceed your gains, the excess carries forward indefinitely to future tax years. Crucially, you must report losses to HMRC to use them — they are not applied automatically. Claims must be made within four years of the end of the tax year the loss arose.

Spread Disposals Across Tax Years

Where possible, spread large disposals over two tax years to use two Annual Exempt Amounts. Selling in March versus April can make a meaningful difference.

Business Asset Disposal Relief (BADR)

If you are selling a qualifying business — as a sole trader, partner, or company director disposing of shares — you may be eligible for a reduced CGT rate. For disposals in 2025/26 this is 14%, rising to 18% from 6 April 2026. There is a £1 million lifetime limit. To qualify you must have owned the business or held at least 5% of shares for at least two years.

Rollover Relief on Business Assets

If you sell a qualifying business asset and reinvest the proceeds into a replacement business asset within three years, you can defer the gain using Rollover Relief. The gain is not eliminated — it is held in the base cost of the new asset — but it delays when you pay the tax.

What Happens If I Don’t Tell HMRC About a Capital Gain?

HMRC has extensive data-matching capabilities — they receive information from land registries, financial institutions, and Companies House. Undisclosed gains are increasingly difficult to hide and HMRC does actively pursue them.

If you fail to report a gain — even accidentally — HMRC can charge:

• The full unpaid CGT, plus interest from the original payment deadline
• Penalties between 30% and 100% of the tax owed, depending on whether HMRC judges the failure to be careless, deliberate, or deliberate and concealed
• In serious cases of deliberate evasion, criminal prosecution is possible

If you have undisclosed gains from previous years, the best course of action is always to come forward voluntarily — HMRC’s penalty regime is significantly more lenient for those who disclose proactively. Always take professional advice before making any disclosure.

I’ve Inherited a Property — Do I Pay Capital Gains Tax?

You do not pay CGT when you inherit a property — inheritance itself is not a disposal for CGT purposes. However, CGT may arise if you later sell the inherited property and it has increased in value since the date of death.

Your base cost for CGT purposes is the probate value — the market value of the property at the date of death, as declared for Inheritance Tax purposes. This means CGT is only calculated on any growth in value from that date to the date you sell.

Example: You inherit a property valued at £240,000 on the date of death. You sell it three years later for £275,000. Your gain is £35,000. After the £3,000 AEA your taxable gain is £32,000 — not the full sale price.

If the inherited property was the deceased’s main home and you sell it promptly, partial Private Residence Relief may apply depending on the circumstances. This is complex and professional advice is strongly recommended.