CEO, The Savvy Investor Limited · Investment Educator
Updated: 13 June 2026 · Reading time: 9 minutes
⚠️ Important: This article provides educational information for UK residents and is not personalised tax advice. CGT interacts with your income, other gains, and reliefs, and rules change. For anything significant (a property sale, a business disposal, large share gains), consult a qualified accountant or tax adviser.
Capital gains tax used to be something only the comfortably wealthy worried about. Not any more. The annual tax-free allowance has been cut from £12,300 in 2022/23 to just £3,000 today, a 75% reduction that quietly drags ordinary investors, second-home owners, and anyone selling shares outside an ISA into the CGT net. If you invest in a general account, sell a buy-to-let, or cash in crypto, this is now your tax to understand.
The short version
- The annual exempt amount is £3,000 for 2026/27 (down from £12,300 in 2022/23).
- CGT rates are 18% on gains that fall within your basic-rate band and 24% above it, now the same for shares and residential property.
- It applies to shares and funds outside an ISA or pension, second properties, crypto, business assets, and valuables.
- It does not apply to your main home, ISAs, pensions, gilts, or your personal car.
- UK residential property gains must be reported and paid within 60 days of completion.
- There are several legitimate ways to cut the bill: using the allowance yearly, Bed and ISA, spousal transfers, offsetting losses, and spreading disposals.
What CGT applies to (and what it doesn’t)
| Usually taxable | Usually exempt |
|---|---|
| Shares and funds held outside an ISA or pension | Your main home (private residence relief) |
| Second homes and buy-to-let property | Anything inside an ISA or pension |
| Cryptoassets | UK government gilts and most qualifying bonds |
| Business assets and company shares | Your personal car |
| Valuables over £6,000 (art, antiques) | Personal possessions individually worth under £6,000 |
The single most powerful CGT shelter is the one most people already have access to: the ISA. Gains inside a Stocks and Shares ISA are entirely free of CGT, which is why filling your ISA before investing in a taxable account is the first move. See our ISA vs SIPP guide.
How CGT is calculated
Your gain is the sale proceeds minus what you paid and minus allowable costs (dealing fees, stamp duty, improvement costs on property). You then deduct the £3,000 annual exempt amount. What remains is taxed, and the rate depends on where the gain sits when stacked on top of your income.
📊 Worked example
Priya, a higher-rate taxpayer, sells shares held outside an ISA for £20,000 that cost her £8,000.
- Gain: £20,000 − £8,000 = £12,000
- Less annual exempt amount: £12,000 − £3,000 = £9,000 taxable
- As a higher-rate taxpayer, CGT at 24%: £2,160 due
Had the same shares been held in a Stocks and Shares ISA, the bill would have been £0.
For a basic-rate taxpayer, gains that still fall within the basic-rate band (after adding them to income) are taxed at 18%; only the part pushing into the higher band is taxed at 24%. So your income in the year of sale matters.
The 60-day property rule
If you sell a UK residential property that is not your main home and there is a taxable gain, you must report it and pay the CGT due within 60 days of completion, using HMRC’s online CGT on property service. This is separate from your normal Self Assessment, and the deadline catches a lot of sellers off guard. Penalties and interest apply if you miss it. Gains on shares and other assets are reported through your annual Self Assessment instead.
Business Asset Disposal Relief
If you sell all or part of a trading business, or qualifying shares in your own trading company, Business Asset Disposal Relief (formerly Entrepreneurs’ Relief) can reduce the CGT rate to 18% from 6 April 2026, up to a £1 million lifetime limit. You generally need to have owned the business, or held at least 5% of the shares, for at least two years. The relief rate has been rising in steps, so business owners planning an exit should check the current position and timing carefully with an accountant.
Seven legitimate ways to cut your CGT
- Use your £3,000 allowance every year. It cannot be carried forward, so unused allowance is lost. Realising gains up to £3,000 a year tax-free, year after year, adds up.
- Bed and ISA. Sell holdings in your taxable account and immediately rebuy them inside your ISA. Future growth is then CGT-free. The sale itself uses your allowance, so spread it across tax years if the gain is large.
- Use both spouses’ allowances. Transfers between spouses and civil partners are CGT-free. Move assets to a partner before sale to use two £3,000 allowances and potentially a lower tax band, doubling the tax-free slice.
- Offset losses. Capital losses reduce your gains. You can carry unused losses forward indefinitely if you report them. This is the heart of tax-loss harvesting.
- Spread disposals across tax years. Selling part now and part after 6 April uses two years’ allowances and can keep gains within the lower 18% band.
- Time the sale to a low-income year. A career break, retirement, or sabbatical year can keep more of a gain in the basic-rate band at 18%.
- Hold inside an ISA or pension from the start. The simplest fix of all: shelter the investment before it ever generates a taxable gain.
Frequently asked questions
Do I pay CGT when I sell my main home?
Usually not. Private residence relief exempts the gain on the home you have lived in throughout your ownership. Complications can arise if you let it out, used part exclusively for business, or own very large grounds, in which case some of the gain may be taxable.
Is crypto subject to CGT?
Yes. HMRC treats most cryptoassets as subject to capital gains tax. Disposals include selling for cash, swapping one token for another, and using crypto to pay for goods, all of which can trigger a gain. Keep detailed records, as the pooling rules are fiddly.
Do I pay CGT on shares I hold in an ISA?
No. Gains (and dividends) inside an ISA are completely tax-free, with nothing to report. This is the single biggest reason to use your annual ISA allowance before investing in a general account.
What if my gains are below £3,000?
If your total gains for the year are within the £3,000 allowance, there is no CGT to pay. You may still need to report disposals in some cases (for example if the proceeds are large or you are already in Self Assessment), so check the current HMRC reporting thresholds.
Sitting on gains outside an ISA?
Losses can offset gains, and the rules reward planning ahead.