Key facts
- CGT was charged at a flat 18% from 2008/09 to 2009/10, replacing the previous taper relief system.
- The 18%/28% split was introduced in June 2010, creating separate rates for basic and higher-rate taxpayers.
- From 2016/17, non-property assets were taxed at 10%/20% while residential property remained at 18%/28%.
- The October 2024 Budget unified rates to 18%/24% for all asset types from 30 October 2024.
- The Annual Exempt Amount has fallen from £10,100 in 2008/09 to just £3,000 in 2025/26.
Before 2008: Taper Relief Era
Before 6 April 2008, capital gains were taxed at Income Tax rates (10%, 20%, and 40%) but with two significant reliefs that reduced the effective rate:[2]
- Indexation allowance: Adjusted the base cost of an asset for inflation (using the Retail Prices Index) from the date of acquisition to April 1998
- Taper relief: Reduced the chargeable gain based on the length of ownership from April 1998 onwards. Business assets received more generous taper than non-business assets
For business assets held for 2 or more years, taper relief reduced the gain by 75%, giving an effective CGT rate of just 10% for higher-rate taxpayers (40% × 25% = 10%). Non-business assets required 10 years to reach maximum taper of 40%.
2008/09 – 2009/10: The Flat 18% Rate
The 2008 Budget swept away taper relief and indexation allowance for individuals, replacing them with a single flat rate of 18% on all capital gains. This was a major simplification but created controversy:[2]
- Business owners saw their effective rate increase from 10% to 18%
- Entrepreneurs’ Relief was introduced in 2008 to partially compensate, offering a 10% rate on the first £1 million of qualifying business gains (initially the lifetime limit was lower)
- The indexation allowance was abolished for individuals (but retained for companies)
2010/11 – 2015/16: The 18%/28% Split
From 23 June 2010 (part-way through 2010/11), the coalition government introduced a split rate:[2]
| Band | Rate |
|---|---|
| Basic-rate taxpayers | 18% |
| Higher and additional-rate taxpayers | 28% |
| Entrepreneurs’ Relief | 10% |
These rates applied to all asset types (shares, property, and other assets) equally. The 28% rate was significantly higher than the pre-2008 effective rates for many taxpayers.
2016/17 – 2023/24: The Four-Rate System
From 6 April 2016, rates were cut for non-property assets while residential property retained the higher rates:[2]
| Band | Shares & Other Assets | Residential Property | Entrepreneurs’ / BADR |
|---|---|---|---|
| Basic rate | 10% | 18% | 10% |
| Higher / additional rate | 20% | 28% | 10% |
This four-rate system lasted from 2016/17 through to part-way through 2024/25. The residential property surcharge of 8 percentage points above the non-property rates reflected the government’s policy of taxing property gains more heavily.
6 April 2024 change: From 6 April 2024 (within the 2024/25 tax year), the higher rate on residential property was reduced from 28% to 24%, while other rates remained unchanged. This was a mid-year change that created a brief period of different property rates within the same tax year.[3]
The October 2024 Budget: Unified Rates
The Autumn Budget on 30 October 2024 unified CGT rates across all asset types for disposals on or after that date:[3]
| Band | All Assets (from 30 Oct 2024) | BADR (2024/25) |
|---|---|---|
| Basic rate | 18% | 10% |
| Higher / additional rate | 24% | 10% |
| Trustees | 24% | 10% |
The key changes were:
- Non-property basic rate: 10% → 18% (an 8 percentage point increase)
- Non-property higher rate: 20% → 24% (a 4 percentage point increase)
- Residential property higher rate remained at 24% (unchanged from 6 April 2024)
- Residential property basic rate remained at 18%
BADR Rate Changes: 2024 – 2026
The October 2024 Budget also announced a phased increase to the Business Asset Disposal Relief rate:[4]
| Period | BADR Rate | Lifetime Limit |
|---|---|---|
| Before 6 April 2025 | 10% | £1 million |
| 6 April 2025 – 5 April 2026 | 14% | £1 million |
| From 6 April 2026 | 18% | £1 million |
Investors’ Relief follows the same rate increases as BADR.
Comprehensive CGT Rates Table: 2008/09 – 2025/26
| Tax Year | Basic Rate (Non-Property) | Higher Rate (Non-Property) | Basic Rate (Property) | Higher Rate (Property) | Entrepreneurs’ / BADR |
|---|---|---|---|---|---|
| 2008/09 | 18% flat rate (all assets, all taxpayers) | 10% | |||
| 2009/10 | 18% flat rate | 10% | |||
| 2010/11 | 18% / 28% (from 23 June 2010) | 10% | |||
| 2011/12 | 18% | 28% | 18% | 28% | 10% |
| 2012/13 | 18% | 28% | 18% | 28% | 10% |
| 2013/14 | 18% | 28% | 18% | 28% | 10% |
| 2014/15 | 18% | 28% | 18% | 28% | 10% |
| 2015/16 | 18% | 28% | 18% | 28% | 10% |
| 2016/17 | 10% | 20% | 18% | 28% | 10% |
| 2017/18 | 10% | 20% | 18% | 28% | 10% |
| 2018/19 | 10% | 20% | 18% | 28% | 10% |
| 2019/20 | 10% | 20% | 18% | 28% | 10% |
| 2020/21 | 10% | 20% | 18% | 28% | 10% |
| 2021/22 | 10% | 20% | 18% | 28% | 10% |
| 2022/23 | 10% | 20% | 18% | 28% | 10% |
| 2023/24 | 10% | 20% | 18% | 28% | 10% |
| 2024/25 (to 5 Apr 2024) | 10% | 20% | 18% | 28% | 10% |
| 2024/25 (6 Apr – 29 Oct) | 10% | 20% | 18% | 24% | 10% |
| 2024/25 (from 30 Oct) | 18% | 24% | 18% | 24% | 10% |
| 2025/26 | 18% | 24% | 18% | 24% | 14% |
Annual Exempt Amount History
| Tax Year | Individual AEA | Trust AEA |
|---|---|---|
| 2008/09 | £9,600 | £4,800 |
| 2009/10 | £10,100 | £5,050 |
| 2010/11 | £10,100 | £5,050 |
| 2011/12 | £10,600 | £5,300 |
| 2012/13 | £10,600 | £5,300 |
| 2013/14 | £10,900 | £5,450 |
| 2014/15 | £11,000 | £5,500 |
| 2015/16 | £11,100 | £5,550 |
| 2016/17 | £11,100 | £5,550 |
| 2017/18 | £11,300 | £5,650 |
| 2018/19 | £11,700 | £5,850 |
| 2019/20 | £12,000 | £6,000 |
| 2020/21 | £12,300 | £6,150 |
| 2021/22 | £12,300 | £6,150 |
| 2022/23 | £12,300 | £6,150 |
| 2023/24 | £6,000 | £3,000 |
| 2024/25 | £3,000 | £1,500 |
| 2025/26 | £3,000 | £1,500 |
A dramatic reduction: The AEA has been cut by over 75% in just three years — from £12,300 in 2022/23 to £3,000 in 2024/25 and 2025/26. This means far more people will have taxable gains, even on relatively modest disposals. Combined with higher rates, the effective CGT burden has increased significantly for many taxpayers.[2]
Entrepreneurs’ Relief / BADR History
| Period | Rate | Lifetime Limit | Name |
|---|---|---|---|
| 2008/09 – 2009/10 | 10% | £1 million | Entrepreneurs’ Relief |
| 2010/11 (from 23 June 2010) | 10% | £5 million | Entrepreneurs’ Relief |
| 2011/12 – 2019/20 | 10% | £10 million | Entrepreneurs’ Relief |
| 2020/21 onwards | 10% | £1 million | Business Asset Disposal Relief |
| 2025/26 | 14% | £1 million | Business Asset Disposal Relief |
| From 6 April 2026 | 18% | £1 million | Business Asset Disposal Relief |
The lifetime limit was reduced from £10 million to £1 million with effect from 11 March 2020 (Budget 2020), and the relief was renamed from Entrepreneurs’ Relief to Business Asset Disposal Relief at the same time.[4]
Frequently Asked Questions
What were CGT rates before 2008?
Before 6 April 2008, capital gains were added to income and taxed at income tax rates (up to 40%). However, taper relief reduced the chargeable gain based on how long you held the asset. Business assets could receive up to 75% taper relief after 2 years, giving an effective rate as low as 10%.
When did CGT rates change to 18% and 24%?
The rates changed on 30 October 2024 as part of the Autumn Budget. The lower rate on non-property assets was increased from 10% to 18%, and the higher rate was increased from 20% to 24%. Residential property rates changed from 18%/28% to 18%/24%.
How has the Annual Exempt Amount changed over time?
The AEA rose from £9,600 in 2008/09 to a peak of £12,300 in 2020/21 to 2022/23. It was then cut to £6,000 in 2023/24, £3,000 in 2024/25, and remains at £3,000 for 2025/26. This represents a 75% reduction from the peak.
What is the BADR rate for 2025/26?
Business Asset Disposal Relief is charged at 14% for 2025/26 (increased from 10% on 6 April 2025). It is scheduled to increase further to 18% from 6 April 2026. The lifetime limit remains £1 million.
Further Reading
- CGT Rates (2025/26) — current rates explained with worked examples
- Annual Exempt Amount — how the AEA works and planning strategies
- Business Asset Disposal Relief — qualifying conditions and claiming BADR
- CGT Glossary — definitions of key CGT terms
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Sources
- Capital Gains Tax rates — GOV.UK
- Rates and allowances: Capital Gains Tax — GOV.UK
- Autumn Budget 2024: Capital Gains Tax changes — GOV.UK
- Business Asset Disposal Relief — GOV.UK