Key facts
- The Annual Exempt Amount for individuals is £3,000 for 2025/26.
- Trustees receive half the individual amount — £1,500 for 2025/26.
- The AEA is a “use it or lose it” allowance — it cannot be carried forward to future years.
- Married couples and civil partners each have their own separate AEA.
- The AEA was reduced from £12,300 (2022/23) to £6,000 (2023/24) and then to £3,000 (from 2024/25).
What Is the Annual Exempt Amount?
The Annual Exempt Amount (AEA) is the amount of capital gains you can make each tax year before any CGT is due. It is sometimes informally called the “CGT allowance” or “CGT-free amount.”[1]
For 2025/26, the AEA is:
| Person | Annual Exempt Amount (2025/26) |
|---|---|
| Individuals | £3,000 |
| Most trustees | £1,500 |
| Personal representatives (year of death + 2 following years) | £3,000 |
How the AEA Has Changed
The AEA has been reduced significantly in recent years:[2]
| Tax Year | Individual AEA | Trustee AEA |
|---|---|---|
| 2025/26 | £3,000 | £1,500 |
| 2024/25 | £3,000 | £1,500 |
| 2023/24 | £6,000 | £3,000 |
| 2022/23 | £12,300 | £6,150 |
| 2021/22 | £12,300 | £6,150 |
| 2020/21 | £12,300 | £6,150 |
The sharp reduction from £12,300 to £3,000 over two years means many more people now have capital gains above the tax-free threshold, particularly those selling property or shares.
Impact: With the AEA at £3,000, even a modest gain on a buy-to-let property, shares, or other investment is likely to exceed the exemption. Tax planning around the timing of disposals has become more important than ever.
How the AEA Works in Practice
The AEA is applied after deducting allowable costs and current-year losses, but before applying brought-forward losses. The steps are:[3]
- Calculate the gain or loss on each disposal
- Deduct current-year losses from current-year gains (you must use all current-year losses, even if this reduces the net gain below the AEA)
- Deduct the Annual Exempt Amount from the remaining net gain
- Deduct brought-forward losses only to the extent needed to reduce the gain to nil (you do not need to waste them below the AEA)
- The remaining amount is the taxable gain, subject to CGT at the applicable rates
Worked Example
Tom makes a gain of £15,000 and a loss of £2,000 in 2025/26. He also has £20,000 of losses brought forward:
| Step | Calculation | Amount |
|---|---|---|
| Total gains | £15,000 | |
| Less: current-year losses | −£2,000 | |
| Net gains | £13,000 | |
| Less: Annual Exempt Amount | −£3,000 | |
| After AEA | £10,000 | |
| Less: brought-forward losses (only enough to reach nil) | −£10,000 | |
| Taxable gain | £0 | |
| Losses remaining to carry forward | £20,000 − £10,000 | £10,000 |
Tom used only £10,000 of his £20,000 brought-forward losses, preserving the rest for future years. This is because brought-forward losses are only used to the extent needed to reduce the taxable gain to nil — they are not wasted against the AEA.
AEA for Trustees
Most trusts receive half the individual AEA — £1,500 for 2025/26. However, if the same settlor has created multiple trusts, the £1,500 is divided equally between them, subject to a minimum of £300 per trust.[3]
| Number of Trusts by Same Settlor | AEA per Trust (2025/26) |
|---|---|
| 1 | £1,500 |
| 2 | £750 |
| 3 | £500 |
| 4 | £375 |
| 5 or more | £300 (minimum) |
Bare trusts: Bare trusts and nominee arrangements are “transparent” for CGT purposes. The beneficiary is treated as owning the asset directly and uses their own AEA. The trust does not use its separate AEA.[3]
Tax Planning Tips
With the AEA now at only £3,000, every bit of planning counts:
- Use both spouses’ AEAs: Transfer assets between spouses before disposal to utilise both £3,000 allowances
- Spread disposals across tax years: If possible, stagger the sale of assets to use the AEA in multiple years
- Bed and ISA: Sell shares and repurchase inside an ISA to crystallise gains within the AEA and shelter future growth
- Make use of losses: Do not forget to claim capital losses — they can be set against gains in the current year or carried forward
Frequently Asked Questions
What is the Capital Gains Tax annual exempt amount for 2025/26?
The Annual Exempt Amount for individuals for 2025/26 is £3,000. This means the first £3,000 of capital gains in the tax year are tax-free. Trustees receive £1,500.
Can I carry forward unused Annual Exempt Amount?
No. The Annual Exempt Amount is a “use it or lose it” allowance. If you do not make gains of £3,000 or more in a tax year, the unused portion is lost and cannot be carried forward to future years.
Do married couples each get their own Annual Exempt Amount?
Yes. Each spouse or civil partner has their own separate Annual Exempt Amount of £3,000. By transferring assets between spouses before disposal, a couple can potentially use up to £6,000 of combined AEA in a single tax year.
How does the Annual Exempt Amount interact with capital losses?
Capital losses in the current year must be deducted from gains before the Annual Exempt Amount is applied. However, losses brought forward from earlier years only need to be used to the extent that they reduce the net gain to the level of the AEA — you do not waste brought-forward losses.
Further Reading
- CGT Rates (2025/26) — the rates applied to your taxable gain after the AEA
- How to Calculate a Capital Gain — step-by-step calculation including the AEA
- ISAs, Pensions & Tax-Free Wrappers — sheltering gains from CGT
- What Is Capital Gains Tax? — the fundamentals of CGT
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