Tax and Salary
TL;DR
Capital gains tax (CGT) is charged on the profit when you sell or dispose of an asset that has increased in value. The annual exempt amount is £3,000 in 2025/26. CGT rates on most assets are 18% for basic rate taxpayers and 24% for higher rate taxpayers. Residential property gains above the annual exempt amount are taxed at 18% or 24%. CGT must be reported to HMRC via self-assessment or, for property sales, within 60 days of completion.
Capital gains tax is charged when you make a profit on the disposal of a chargeable asset. A disposal includes a sale, a gift, a transfer to a trust, or an exchange for other assets. The gain is calculated as the proceeds (or market value if gifted) less the original cost, plus any allowable improvement costs. CGT is not charged on your main home (subject to Private Residence Relief), on ISA or pension investments, on UK government gilts, or on assets with a value below £6,000 at disposal.
CGT rates and allowances have changed significantly in recent years. The Autumn Budget 2024 increased CGT rates on most assets from 10%/20% to 18%/24% with effect from 30 October 2024, aligning the rates on non-property assets with the residential property rates. The annual exempt amount was reduced from £6,000 to £3,000 from April 2024. This guide covers the current CGT rates, what triggers a liability, and how to report and pay.
Key facts (2026)
- Annual exempt amount 2025/26: £3,000 per individual. Gains below this threshold are not subject to CGT (HMRC).
- CGT rates from 30 October 2024: 18% for basic rate taxpayers and 24% for higher and additional rate taxpayers on most chargeable assets including residential property. Business Asset Disposal Relief rate: 14% for 2025/26 (HMRC).
- Residential property disposals must be reported to HMRC and any CGT paid within 60 days of completion, via HMRC's online property disposal return service (HMRC).
- Private Residence Relief (PRR) exempts gains on the sale of your only or main home from CGT where the property has been your principal private residence throughout the period of ownership (HMRC).
- Assets held in an ISA or pension are outside the CGT regime; no CGT is payable on gains within these wrappers regardless of the size of the gain (HMRC).
What triggers a CGT liability
CGT arises when you dispose of a chargeable asset at a gain. Common chargeable assets include: shares and investment funds held outside an ISA or pension; second properties and buy-to-let properties; business assets; cryptocurrency; valuable personal possessions worth more than £6,000 (chattel exemption applies below this); and your main home where it has not been your principal private residence for the entire period of ownership. Exempt assets include your main home (subject to PRR), ISA and pension investments, UK government gilts, Premium Bonds, personal use vehicles, betting winnings, and assets transferred between spouses or civil partners (which are treated as no-gain no-loss transfers). The gain is calculated as disposal proceeds minus acquisition cost minus allowable costs (legal fees, improvement costs, but not general maintenance). If the disposal is a gift, market value at the date of disposal is used as the proceeds figure.
CGT rates in 2025/26
From 30 October 2024, CGT rates on most chargeable assets (excluding carried interest) are 18% for basic rate taxpayers and 24% for higher and additional rate taxpayers. These rates also apply to residential property gains. Whether you pay the 18% or 24% rate depends on where the gain falls within your income tax bands after your personal allowance and other income: if the gain, when added to your taxable income, falls within the basic rate band (up to £50,270 in 2025/26), the 18% rate applies to that portion; any portion of the gain that exceeds the higher rate threshold is taxed at 24%. Business Asset Disposal Relief (formerly Entrepreneurs' Relief) applies a reduced rate of 14% in 2025/26 (rising to 18% from 2026/27) on the first £1 million of qualifying business asset gains over a lifetime, subject to meeting the holding period and business involvement conditions. Investors' Relief similarly applies a 14% rate on up to £10 million of qualifying gains for external investors in unlisted trading companies.
Private Residence Relief and lettings relief
Your main home is generally exempt from CGT under Private Residence Relief, provided it has been your only or main residence throughout the entire period of ownership. The last nine months of ownership are always treated as a period of residence for CGT purposes, even if you have moved out - this is designed to help people who move before completing a sale. Where the property was your main residence for only part of the period of ownership, PRR applies pro-rata to the qualifying periods; the remaining portion of the gain is chargeable. Periods of absence that can still qualify for relief include: periods working abroad, the first three years of absence for any reason if the property was your main residence before and after the absence, and periods living in job-related accommodation. Lettings relief, which previously allowed up to £40,000 of additional relief for periods of letting, was restricted in April 2020 and now only applies where the owner and tenant live in the property simultaneously (shared occupancy).
Reporting and paying CGT
For residential property disposals (including buy-to-let and second homes), CGT must be reported and paid within 60 days of completion using HMRC's online UK Property Disposal service. Failure to report within 60 days results in a late filing penalty (currently £100 for up to 6 months late, increasing thereafter). For other chargeable asset disposals - shares, business assets, cryptocurrency - CGT is reported and paid via the self-assessment tax return for the relevant tax year, with payment due by 31 January following the tax year end. If you are not already registered for self-assessment, register with HMRC by 5 October following the end of the tax year in which the disposal occurred. Gains on assets within an ISA or pension do not need to be reported.
CGT planning: key reliefs and strategies
Several legitimate strategies can reduce CGT liabilities. Using the annual exempt amount each year: gains up to £3,000 are tax-free, but the allowance cannot be carried forward if unused. Transferring assets to a spouse or civil partner before disposal: assets can be transferred between spouses on a no-gain no-loss basis, allowing both partners' annual exempt amounts to be used. Bed and ISA: selling assets outside an ISA to crystallise a gain within the annual exempt amount, then immediately repurchasing within an ISA shelter to remove future gains from CGT. Loss relief: capital losses in the same tax year are offset against gains before applying the annual exempt amount; losses in excess of gains can be carried forward to future tax years. Enterprise Investment Scheme (EIS) investments offer CGT deferral relief, allowing gains on other assets to be deferred if reinvested in qualifying EIS shares. Always seek regulated financial or tax advice before implementing CGT planning strategies, as the rules are complex and have changed significantly in recent years.
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Frequently asked questions
Do I pay CGT when I sell my home?
Not usually. Your main home is exempt from CGT under Private Residence Relief provided it was your only or main residence for the entire period of ownership. If you have lived elsewhere for part of the time, rented the property out, or used part of it exclusively for business, a proportion of the gain may be chargeable. The last nine months of ownership always qualify for PRR relief even if you have already moved out.
What is the CGT rate on shares in 2025/26?
Following the October 2024 Budget, CGT on shares and most other assets (excluding carried interest) is 18% for basic rate taxpayers and 24% for higher and additional rate taxpayers. These are the same rates as for residential property. The rate that applies depends on whether the gain, when added to your taxable income, falls within the basic or higher rate band for that tax year.
How do I report a capital gain on a second property?
Residential property CGT must be reported and paid within 60 days of completion using HMRC's online UK Property Disposal service. You will need your Government Gateway login and details of the purchase price, sale price, allowable costs, and any reliefs you are claiming. An estimate of the CGT due is payable at this stage; the final liability is reconciled through self-assessment at the year end.
Can I offset capital losses against gains?
Yes. Capital losses in the same tax year are automatically offset against capital gains before the annual exempt amount is applied. If losses exceed gains in a year, the net loss is carried forward to future tax years and offset against future gains. Losses must be claimed within four years of the end of the tax year in which they arose; they are not applied automatically and must be reported to HMRC.
Is cryptocurrency subject to CGT?
Yes. HMRC treats cryptocurrency as a chargeable asset for CGT purposes. Disposing of crypto - by selling for cash, exchanging for another cryptocurrency, using it to pay for goods or services, or gifting it (other than to a spouse) - triggers a potential CGT liability. The gain is calculated using HMRC's specific identification rules, which differ from straightforward FIFO accounting. All crypto disposals must be reported to HMRC if the total proceeds exceed four times the annual exempt amount (currently £12,000) or if there is a gain above the exempt amount.
How we verified this guide
All CGT rates, annual exempt amounts, and reporting rules were verified against HMRC CGT guidance, HMRC's October 2024 Budget CGT rate changes, and the 60-day property disposal reporting rules during May 2026. We do not accept payment from tax advisers and do not earn commission on CGT planning referrals.
Primary sources
- HMRC - Capital gains tax overview
- HMRC - Report and pay capital gains tax
- Citizens Advice - Capital gains tax explained
- MoneyHelper - Capital gains tax guide
Last reviewed: May 2026.