Capital Gains Tax explained

Capital Gains Tax (CGT) is charged on the profit you make when you sell or give away an asset that has increased in value — shares, property, antiques and more. The key idea is that only the gain is taxed, not the full sale price, and only the part above your annual allowance.

The annual exempt amount

Each tax year, the first £3,000 of gains is tax-free. It’s an allowance, not a rate — it reduces the gains that count towards your bill, and everything above it is taxed. The allowance was cut to £3,000 for 2024/25 and stays there for 2026/27, so check the figure for the year you dispose of an asset.

The rates

Gains above the allowance are taxed as your top slice of income. Two rates apply in 2026/27:

• 18% — on gains that fit in your unused basic rate band
• 24% — on gains above that (the higher rate band)

Your salary, rental income and savings all fill up the basic rate band first. A high salary can push your gains entirely into the 24% band even on a modest gain.

Example. You earn £30,000 from salary and make a £15,000 gain on shares. After the Personal Allowance, £17,430 of your salary is taxable, leaving £20,270 of the basic rate band unused. The annual exempt amount removes the first £3,000 of the gain, leaving £12,000 taxable. It all fits in the unused band, so the bill is £12,000 × 18% = £2,160.

What is and isn’t taxable

• Chargeable — shares, second homes and buy-to-lets, businesses, antiques, art and personal possessions worth over £6,000
• Usually exempt — your only or main home, ISAs, cars, and gains on gilts and Premium Bonds

Property has its own deadline

If you sell a residential property that isn’t your main home, you usually need to report the gain and pay the tax within 60 days of completion — much sooner than the Self Assessment deadline for other assets.

See the maths

Use the Capital Gains Tax calculator for your exact bill, and the dividend tax calculator if your gains include dividend-paying shares.