CGT Glossary

Key facts

CGT has its own vocabulary — understanding terms like AEA, BADR, Section 104 pool, and rebasing is essential for managing your tax.
Many CGT terms have specific legal meanings that differ from their everyday use — for example, a “disposal” is broader than just a sale.
Some historical terms like taper relief and Entrepreneurs’ Relief no longer apply but appear in older HMRC guidance.
This glossary covers the terms most commonly encountered by individuals, landlords, and small business owners.

A – B

Term	Definition
AEA (Annual Exempt Amount)	The amount of capital gains an individual can make each tax year before CGT is charged. For 2025/26, the AEA is £3,000 for individuals and £1,500 for most trusts. Also called the “annual exemption” or informally the “CGT allowance”.^[1]
Allowable costs	Expenditure that can be deducted from disposal proceeds when calculating a capital gain. Includes the original acquisition cost, incidental costs of buying and selling (solicitor fees, stamp duty, estate agent fees), and capital improvement expenditure. Does not include routine repairs, maintenance, or mortgage interest.
BADR (Business Asset Disposal Relief)	A CGT relief providing a reduced tax rate on qualifying business disposals. Formerly called Entrepreneurs’ Relief (renamed 6 April 2020). The rate is 14% for 2025/26, rising to 18% from 2026/27. There is a £1 million lifetime limit on qualifying gains.^[3]
Base cost	The acquisition cost of an asset for CGT purposes. Normally the price paid, but may be the market value at the date of acquisition (for gifts or inheritance), the March 1982 value (for pre-1982 assets), or the probate value (for inherited assets). The base cost is deducted from disposal proceeds to calculate the gain.
Bed and breakfasting	The practice of selling shares and repurchasing them shortly after to crystallise a gain or loss. The “30-day rule” (also called the “bed and breakfasting rule”) prevents this by matching a disposal with any acquisition of the same shares within 30 days, nullifying the tax benefit.^[4]

C – D

Term	Definition
Chargeable gain	A gain on the disposal of a chargeable asset that is subject to CGT after deducting allowable costs and any available reliefs. The chargeable gain is the amount on which CGT is calculated (after deducting the AEA).
Chargeable asset	Any asset that can give rise to a chargeable gain on disposal. Almost all assets are chargeable, with specific exemptions for cars, your main home (via PRR), ISA investments, gilts, and certain other items.
Connected person	A person with a family or business relationship to the taxpayer. Includes spouse/civil partner, siblings, parents, children, and their spouses; business partners; and companies you control. Disposals to connected persons are deemed to take place at market value, and losses are restricted.
Disposal	Any event that triggers a CGT computation. Includes selling an asset, giving it away, exchanging it, losing or destroying it, receiving compensation for it, or transferring it. Some events are deemed disposals even though no money changes hands (e.g. gifting an asset).^[1]
Disposal proceeds	The amount received (or deemed to be received) on the disposal of an asset. For a sale, this is the sale price. For a gift or a transaction with a connected person, market value is used instead.

E – H

Term	Definition
EIS (Enterprise Investment Scheme)	A government scheme offering tax reliefs to investors in qualifying small companies. For CGT purposes, gains on qualifying EIS shares held for at least 3 years are exempt from CGT. Gains from other assets can also be deferred by reinvesting into EIS shares.
Entrepreneurs’ Relief	The former name for Business Asset Disposal Relief (BADR). Renamed on 6 April 2020. The relief and its conditions are unchanged; only the name was altered. See BADR.
Holdover relief (Gift relief)	A relief that allows CGT to be deferred when certain assets are gifted. Available for gifts of business assets (s.165 TCGA 1992) and gifts on which IHT is chargeable (s.260 TCGA 1992). The donor and donee make a joint election, and the donee acquires the asset at the donor’s base cost, “holding over” the gain.

I – L

Term	Definition
Incidental costs	Costs associated with buying or selling an asset that are allowable deductions for CGT. Includes solicitor fees, estate agent fees, stamp duty on purchase, valuation fees, and advertising costs for the sale. Does not include the cost of borrowing or financing.
Indexation allowance	An allowance that increases the base cost of an asset to account for inflation, calculated using the Retail Prices Index (RPI). Abolished for individuals from 6 April 2008 but retained for companies, frozen at December 2017 values. Indexation cannot create or increase a loss.^[2]
Investors’ Relief	A CGT relief offering a reduced rate on gains from disposing of qualifying shares in unlisted trading companies. Shares must be newly issued, subscribed for on or after 17 March 2016, and held for at least 3 years. The rate is 14% for 2025/26 (same as BADR) with a £10 million lifetime limit.
Lettings relief	A CGT relief of up to £40,000 available when a property that qualifies for Private Residence Relief has also been let as residential accommodation. From 6 April 2020, lettings relief only applies if the owner shared occupation with the tenant. Before April 2020, it applied to any qualifying let period.

N – P

Term	Definition
Negligible value claim	A claim made when an asset has become worth virtually nothing (e.g. shares in an insolvent company). The claim treats the asset as if it were sold and immediately reacquired at its negligible value, crystallising an allowable loss without needing to physically sell the asset.
No gain no loss	A transfer where the disposal is treated as producing neither a gain nor a loss. The transferee acquires the asset at the transferor’s base cost. Applies to transfers between spouses/civil partners living together, and certain other statutory situations (e.g. transfers within a group of companies).
Part disposal	A disposal of part of an asset (e.g. selling part of a piece of land). The base cost is apportioned using the formula: A ÷ (A + B), where A is the disposal proceeds and B is the market value of the part retained. This fraction is applied to the total base cost to determine the allowable cost for the part disposed of.
PRR (Private Residence Relief)	The main CGT relief for your home. Exempts gains attributable to periods when the property was your only or main residence. The final 9 months of ownership are always exempt (the “final period exemption”), even if you are not living there. The relief is automatic and does not need to be claimed.^[1]

R – S

Term	Definition
Rebasing (31 March 1982)	For assets held on 31 March 1982, the market value on that date is used as the base cost instead of the original acquisition cost. This ensures that gains accruing before CGT was reformed (pre-1982) are not taxed. Applies automatically to most disposals of pre-1982 assets.
Rollover relief	A relief that defers CGT when the proceeds from selling a qualifying business asset are reinvested in a new qualifying business asset within a specified period (1 year before to 3 years after the disposal). The gain is “rolled over” into the new asset, reducing its base cost.
SA108	The Capital Gains Summary supplementary pages of the Self Assessment tax return. Used to report all capital gains and losses for the tax year. Covers listed shares, unlisted shares, property disposals, and other assets. Filed as part of the annual Self Assessment return by 31 January.
Section 104 pool	The pooling method for calculating the base cost of shares of the same class in the same company. All acquisitions are added to the pool, creating a weighted average cost per share. When shares are sold, the pool is reduced proportionally. Named after s.104 of the Taxation of Chargeable Gains Act 1992.^[4]
SEIS (Seed Enterprise Investment Scheme)	A more generous version of EIS for very early-stage companies. Offers 50% Income Tax relief on investments up to £200,000 per tax year, and gains on qualifying SEIS shares held for at least 3 years are exempt from CGT.

T – Z

Term	Definition
Taper relief (historical)	A CGT relief that applied from 6 April 1998 to 5 April 2008. It reduced the chargeable gain based on the length of ownership. Business assets received more generous taper than non-business assets. Abolished from 6 April 2008 when the flat 18% rate was introduced. No longer applies to any disposals.
TCGA 1992	The Taxation of Chargeable Gains Act 1992 — the primary legislation governing Capital Gains Tax in the UK. Most CGT rules, reliefs, and exemptions are found in this Act.
Time apportionment	A method of splitting a gain over the period of ownership to tax only the portion attributable to a specific period. Used in non-resident CGT calculations (to tax only the post-April 2015 or post-April 2019 portion) and in PRR calculations (to exempt periods of occupation).
60-day return	The CGT property return that must be filed within 60 days of completion when UK residential property is disposed of at a gain. Filed through HMRC’s “Capital Gains Tax on UK property” online service. Non-UK residents must file for all UK property disposals regardless of gain or loss.
Wasting asset	An asset with a predictable useful life of 50 years or less at the time of disposal. Wasting chattels (tangible movable property that is a wasting asset) are exempt from CGT. Examples include most machinery, boats, and caravans. Plant and machinery used in a business are treated as wasting assets regardless of their actual useful life.

Frequently Asked Questions

What does AEA stand for in CGT?

AEA stands for Annual Exempt Amount. It is the amount of capital gains you can make each tax year before CGT is charged. For 2025/26, the AEA is £3,000 for individuals and £1,500 for most trusts. It is sometimes also called the “annual exemption” or “CGT allowance”.

What is the difference between BADR and Entrepreneurs’ Relief?

They are the same relief. Entrepreneurs’ Relief was renamed to Business Asset Disposal Relief (BADR) on 6 April 2020. The qualifying conditions and lifetime limit (£1 million) remained the same. The rate was 10% until 5 April 2025, rising to 14% for 2025/26 and 18% from 2026/27.

What is a Section 104 pool?

A Section 104 pool (also called a “share pool”) is the method used to calculate the base cost of shares of the same class in the same company. Each time you buy shares, they are added to the pool; each time you sell, a proportion is removed. The pool gives you a weighted average cost per share for CGT purposes.

What does “no gain no loss” mean?

A no gain/no loss transfer is one where the disposal is treated as producing neither a gain nor a loss. The receiving person takes over the original base cost. The most common example is transfers between spouses or civil partners who are living together. The gain is deferred, not eliminated.

Sources

Capital Gains Tax: what you pay it on, rates and allowances — GOV.UK
Capital Gains Manual — HMRC
Business Asset Disposal Relief — GOV.UK
HS284 Shares and Capital Gains Tax — HMRC