Pay & tax
Capital Gains Tax Explained: A Simple UK Guide
What Capital Gains Tax is, how to work out your gain, the £3,000 annual exempt amount, 18%/24% rates, and what is usually tax-free.
Updated July 2026 · 8 min read
General information only — not financial, legal or tax advice. Rates and rules change; check GOV.UK or official resources before making decisions.
Key takeaways
- CGT is tax on the profit when you dispose of an asset — not on the full sale price.
- For 2026/27 you get a £3,000 annual exempt amount; gains above that are taxed at 18% or 24%.
- Your main home is usually exempt under Private Residence Relief; ISAs keep investment gains tax-free.
- On a £10,000 share gain with a £30,000 salary, CGT is about £1,260 after the £3,000 allowance.
- Use the Capital Gains Tax Calculator with your gain and other income to estimate the bill.
What is Capital Gains Tax?
Capital Gains Tax (CGT) is charged on the profit when you sell or otherwise dispose of an asset that has gone up in value — for example shares, funds, crypto, a second home or valuables. You pay tax on the gain, not the cash you receive from the sale.
It is separate from income tax and National Insurance on your salary. Your other income still matters, though, because it decides whether leftover gains are taxed at the basic or higher CGT rate.
How do I calculate a capital gain?
Start with what you sold the asset for, then subtract what you paid for it and allowable costs such as broker fees or stamp duty on purchase. The difference is your gain (or loss).
Example: you buy shares for £12,000, pay £100 in dealing costs, and later sell for £20,000 with £50 of sale costs. Gain = £20,000 − £12,000 − £100 − £50 = £7,850 before the annual exempt amount.
- Sale proceeds (what you received).
- Minus purchase cost and allowable incidental costs.
- Minus enhancement costs that added value (where allowed).
- Equals the gain for that disposal.
What is the CGT annual exempt amount?
Everyone has an annual exempt amount of £3,000 for 2026/27. Gains up to that figure in the tax year are tax-free. Anything above is taxable. Unused allowance cannot be carried forward.
Couples each have their own £3,000. For current rates and how the band interacts with salary, see our Capital Gains Tax 2026/27 guide.
What Capital Gains Tax rates apply?
For 2026/27 the main rates are 18% on gains that fit in your remaining basic-rate income-tax band, and 24% on gains above it. Your salary and other taxable income use the basic band first; gains stack on top.
If you are already a higher-rate taxpayer, taxable gains are usually charged at 24%. Basic-rate taxpayers may still pay 18% on some or all of a modest gain.
| Slice of gain | Rate |
|---|---|
| First £3,000 (annual exempt amount) | 0% |
| Within remaining basic-rate band | 18% |
| Above the basic-rate band | 24% |
Worked examples
These examples use one disposal in the tax year and the standard personal allowance. They show CGT only — income tax on salary is separate.
| Gain | Other income | Taxable gain | CGT due |
|---|---|---|---|
| £5,000 | £20,000 | £2,000 | £360 |
| £10,000 | £30,000 | £7,000 | £1,260 |
| £10,000 | £60,000 | £7,000 | £1,680 |
| £15,000 | £25,000 | £12,000 | £2,160 |
Do I pay CGT on my home?
Usually not. Your only or main residence often qualifies for Private Residence Relief, so a gain on selling it is typically tax-free. Second homes, buy-to-lets and inherited properties you do not live in as your main home are more likely to face CGT.
Mixed use, periods of absence or letting can change the relief. Check GOV.UK Private Residence Relief rules or get advice if the history of the property is complicated.
What else is usually free of CGT?
Gains inside a Stocks and Shares ISA (or other ISA wrapper) are free of CGT and do not use your £3,000 allowance. Transfers between spouses or civil partners are usually on a no-gain/no-loss basis for CGT.
Cars for personal use, UK government gilts and some prizes or betting winnings sit outside CGT. Always check the asset type on GOV.UK before you assume a disposal is taxable.
How do I report and pay Capital Gains Tax?
Most people report CGT through Self Assessment. Residential property gains usually need a separate report and payment to HMRC within 60 days of completion.
Keep records of purchase price, sale proceeds and costs. Use the Capital Gains Tax Calculator for an estimate, then confirm figures against HMRC guidance before you file.
Frequently asked questions
- What is Capital Gains Tax in the UK?
- It is tax on the profit when you dispose of certain assets that have risen in value. You pay on the gain after costs and the annual exempt amount, not on the full sale price.
- How do I calculate Capital Gains Tax?
- Work out proceeds minus cost and allowable expenses to get the gain. Subtract the £3,000 annual exempt amount (2026/27), then apply 18% or 24% depending on how much basic-rate band your other income has left.
- What is the CGT allowance for 2026/27?
- The annual exempt amount is £3,000 per person. Gains up to that are tax-free. Unused allowance cannot be carried into the next tax year.
- Do I pay CGT when I sell my main home?
- Usually no, if Private Residence Relief applies to your only or main residence. Second homes and investment properties are more likely to be chargeable.
- Are ISA gains subject to Capital Gains Tax?
- No. Gains on investments held in an ISA are free of CGT and do not use your annual exempt amount. Use the ISA Allowance Calculator to track how much ISA room you have left.
- When do I have to report a property gain?
- Residential property disposals that give rise to CGT usually must be reported to HMRC within 60 days of completion, with any tax paid on the same timeline. Other assets are typically reported via Self Assessment.
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