Capital Gains Tax Guide UK 2025-26

Following the October 2024 Budget, CGT rates are: Residential property: 18% (basic rate taxpayers) and 24% (higher/additional rate). Shares, funds, crypto and most other assets: 18% (basic rate) and 24% (higher/additional rate). Note: rates on shares were increased significantly from 10%/20% in October 2024 and property rates were reduced from 18%/28%. Business assets qualifying for Business Asset Disposal Relief (BADR): 18% from April 2025 (increased from 10%). The annual CGT exempt amount is £3,000 for 2025-26 - significantly reduced from £12,300 in 2022-23 and £6,000 in 2023-24.

Usually no. Private Residence Relief (PRR) fully exempts your main and only home from CGT. To qualify: you must have occupied it as your main residence for the entire ownership period, the garden must be half a hectare or less, and it must not have been used wholly for business. The final 9 months of ownership always qualify for PRR even if you've moved out. If you've let the property or it has been vacant for periods, a proportion of the gain becomes taxable. Partial PRR relief applies based on the ratio of qualifying occupation to total ownership period.

Every UK individual has an annual Capital Gains Tax exempt amount (also called the annual exemption or AEA) of £3,000 (2025-26). Your first £3,000 of net capital gains in a tax year are tax-free. The exemption resets each April 6 - it cannot be carried forward. Couples each have their own £3,000 exemption. If you jointly own assets, you can both use your exemptions (£6,000 combined). Planning the timing of asset disposals across two tax years can effectively double the exemption you benefit from.

Capital losses from selling assets at a loss can be offset against capital gains in the same tax year, reducing your taxable gain. If losses exceed gains in a year, the net loss can be carried forward indefinitely to offset future gains. You must report losses to HMRC (via Self Assessment or a separate claim) within 4 years of the end of the tax year in which they occurred. Allowable losses reduce your gains before applying the annual exempt amount - you can't 'save' the annual exemption by choosing to apply losses later. Losses on assets sold to connected parties (family members) can only offset gains on assets sold to the same person.

For UK residential property: you must report the gain and pay any CGT due within 60 days of completion, using HMRC's UK Property Reporting Service (uk-property-tax-reporting.tax.service.gov.uk). This 60-day reporting requirement applies even if no tax is due. For other assets (shares, crypto, business assets): report via your annual Self Assessment tax return, with payment due by 31 January following the end of the tax year. If your total gains are below the reporting threshold (less than 4x the annual exemption = £12,000 for 2025-26) and you don't normally file Self Assessment, you may not need to report - but check current HMRC guidance.

BADR (formerly Entrepreneurs' Relief) is a CGT relief allowing qualifying business asset disposals to be taxed at a reduced rate. From April 2025, the BADR rate is 18% (increased from 10% in the October 2024 Budget, and rising to 18% in 2025 as planned). From April 2026, the rate will align with the basic rate (currently 18%). Qualifying for BADR: you must be selling all or part of a trading business, have been a sole trader or business partner for 2+ years, or be selling shares in your own company (owning 5%+ of shares and voting rights, being an employee/officer for 2+ years). The lifetime BADR allowance is £1 million. Above £1 million, standard CGT rates apply.

Key strategies: 1) Use your £3,000 annual exemption every year - sell assets gradually rather than all at once. 2) Transfer assets to spouse/civil partner before sale to utilise both exemptions and potentially their lower tax rate (transfers between spouses are exempt from CGT). 3) Use ISAs - gains on investments held in a Stocks & Shares ISA are completely CGT-free (but transferring existing gain into ISA is a disposal event). 4) Harvest losses - realise assets standing at a loss in the same year as gains to offset the gain. 5) Time disposals around tax year-end to use two years' exemptions. 6) Invest via EIS/SEIS - CGT deferral and reinvestment relief available. 7) Increase pension contributions to ensure you're a basic rate taxpayer, accessing the lower CGT band.