Capital Gains Tax UK 2026: New Rules and Annual Allowance
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CGT changes have made disposals significantly more expensive in 2026. Knowing the rules can save you £1,000s — and sometimes the difference between selling now vs holding.
The 2026 CGT Rate Structure
For most assets disposed of in 2026/27:
- Within basic-rate band: 18% (raised from 10%)
- Within higher-rate band: 24% (raised from 20%)
For residential property (not main residence):
- Within basic-rate band: 18%
- Within higher-rate band: 28% (held at higher level)
For carried interest (private equity workers):
- 28% (raised significantly)
Annual Exempt Amount (AEA)
The CGT annual allowance keeps shrinking:
- 2022/23: £12,300
- 2023/24: £6,000
- 2024/25: £3,000
- 2025/26: £3,000
- 2026/27: £3,000
So in 2026, only the first £3,000 of gains are exempt.
What’s Exempt from CGT Entirely
- Main residence (PPR): Capital gain on selling your primary home
- ISA wrapper: All gains within Stocks & Shares ISAs
- Pensions: All gains within SIPPs and workplace pensions
- Gifts to spouse/civil partner: No CGT triggered
- Gifts to charity: Full exemption
- Personal items under £6,000 (cars, jewelry under threshold)
When CGT Becomes Most Painful
Selling a Buy-to-Let: £200k purchase, £350k sale = £150k gain
- £3,000 AEA
- £147,000 taxable
- £147k × 24% (higher rate) = £35,280 in tax
Worth noting: The 28% rate now only applies to certain pre-existing property gains, but residential property still attracts surcharges.
Selling a second home or holiday home: Subject to residential property CGT rates. Same brutal math.
Crypto gains: Treated as personal investments. Same rates apply. Detailed reporting required.
Strategies to Reduce CGT
1. Use both spouses’ allowances
- Transfer asset to spouse before disposal
- £3,000 + £3,000 = £6,000 combined annual allowance
- Use both higher/basic-rate bands
- Saves up to £960/year
2. Spread disposals across tax years Sell some assets March 5 (current year), more April 6+ (new year). Two AEAs, two band uses.
3. Realize losses to offset gains If you have an asset down on its cost, sell it. Use the loss to reduce your taxable gain.
4. Bed and ISA Sell holdings outside ISA, immediately rebuy inside ISA. Future gains tax-free.
5. Bed and SIPP Similar to Bed and ISA but for pension wrappers. Higher-rate taxpayers benefit most.
6. Gift to spouse with lower income Transfer to a basic-rate spouse before disposal. They pay 18% instead of 24%.
Reporting Requirements
Property disposals:
- Must be reported to HMRC within 60 days of completion
- CGT paid within same 60 days
- This is separate from your annual tax return
Other asset disposals:
- Reported on your self-assessment for the tax year
- Tax paid by 31 January following the tax year
Penalties for late reporting:
- 1 day late: £100
- 3 months late: Daily fines
- 12 months late: 100% of tax owed
Important 2026 Rules
Negligible value claims: If shares become worthless, you can claim a capital loss without selling them. Useful for failed startup investments.
Roll-over relief: For business asset sales (Entrepreneurs’ Relief). Limited cases now.
Hold-over relief: Transferring business assets to family. Reduces immediate CGT.
Crypto Specifics
HMRC treats crypto as:
- Personal investment (most users) — CGT applies
- Trading (if frequent, professional) — Income tax may apply
- Mining/staking — Income at receipt, then CGT on disposal
Each transaction is a disposal event. Multiple crypto-to-crypto swaps = multiple CGT events.
Property-Specific Strategies
- Move into property briefly before selling: Establish PPR (with caveats — HMRC scrutinizes)
- Stagger sales to use multiple tax years
- Consider gift to spouse before sale if income differs significantly
- Time the financial year boundary (April 5 → April 6) for two tax years
Common CGT Mistakes
- Forgetting acquisition costs reduce taxable gain (legal fees, stamp duty, capital improvements)
- Missing the 60-day property reporting deadline
- Not realizing losses can offset gains
- Treating crypto as one big gain instead of per-transaction events
💡 Pro Tip: If you have any large asset to sell, plan the year carefully. Splitting between two tax years can save £576 minimum (two £3k allowances + lower rate utilization).
