Capital Gains Tax: The Basics

How Capital Gains Tax Works

CGT is a tax on the profit (gain) you make when you sell or dispose of an asset that’s increased in value. You pay tax on the gain, not the total amount you received.^[1]

A “disposal” doesn’t just mean selling. It includes giving an asset away, swapping it, or receiving compensation for it.

What Assets Are Liable?

CGT can apply to:^[1]

Property that isn’t your main home (buy-to-let, second homes, land)
Shares and investments (outside of ISAs)
Business assets
Cryptocurrency
Valuable personal possessions worth over £6,000 (art, jewellery, antiques)

Your main home is usually exempt (Private Residence Relief). Cars, ISA investments, and personal possessions worth under £6,000 are also exempt.

CGT Rates

Asset Type	Basic Rate Taxpayer	Higher/Additional Rate
Most assets (shares, crypto, etc.)	18%	24%
Residential property	18%	24%

Your rate depends on your total taxable income plus the gain — if the gain pushes you into the higher rate band, part of it may be taxed at the higher rate.^[2]

Annual Exempt Amount

Everyone gets a tax-free CGT allowance of £3,000 per year (from 2024/25). Gains below this aren’t taxed. You can’t carry unused allowance to the next year.^[1]

How to Calculate a Gain

The formula is:^[1]

Sale proceeds − Purchase cost − Allowable costs − Annual exempt amount = Taxable gain

Allowable costs include:

Purchase price
Stamp Duty and legal fees (on purchase and sale)
Improvement costs (that add value to the asset)
Selling costs (estate agent fees, advertising)

Losses

If you make a loss on a disposal, you can:^[4]

Offset against gains in the same tax year
Carry forward unused losses to future years (indefinitely)

You must report losses to HMRC within 4 years to carry them forward. Losses are usually claimed when you file your Self Assessment return.

Reporting CGT

How you report depends on the asset:^[3]

UK residential property: report and pay within 60 days of completion using HMRC’s online service
Everything else: report through Self Assessment (SA108 supplementary pages)

Key CGT Reliefs

Private Residence Relief — main home is exempt
Business Asset Disposal Relief — 18% rate on qualifying business assets up to £1m lifetime
Investors’ Relief — 18% rate on qualifying share disposals up to £1m lifetime
Rollover Relief — defer gains when replacing business assets
Gift Hold-Over Relief — defer gains when gifting business assets

Frequently Asked Questions

What is the Capital Gains Tax allowance for 2026/27?

The annual exempt amount for 2026/27 is £3,000. Gains below this threshold are not taxed, and you cannot carry unused allowance forward to the next year.

What rate of Capital Gains Tax do I pay in the UK?

For disposals on or after 30 October 2024, the rate is 18% for basic-rate taxpayers and 24% for higher and additional-rate taxpayers — for all asset types, including shares, crypto, and residential property.

Do I pay CGT on my main home?

No. Your main home is usually exempt from CGT thanks to Private Residence Relief. CGT applies to buy-to-let properties, second homes, shares, cryptocurrency, and valuable personal possessions worth over £6,000.

Can I offset capital losses against gains?

Yes. If you make a loss on a disposal, you can offset it against gains in the same tax year or carry it forward indefinitely to use against future gains. You must report losses to HMRC within 4 years.

Sources

Capital Gains Tax: what you pay it on, rates and allowances — GOV.UK
Capital Gains Tax rates — GOV.UK
Report and pay Capital Gains Tax on UK property — GOV.UK
Capital Gains Tax: losses — GOV.UK
Self Assessment: capital gains summary — GOV.UK