The Capital Gains Tax allowance lets you make up to £3,000 of profit from selling assets each tax year before any Capital Gains Tax is due. It is a per-person figure, it resets every 6 April, and any gain above it is taxed at 18% or 24% depending on your income.1HM Revenue & Customs. Capital Gains Tax Rates and Allowances The formal name is the Annual Exempt Amount, and it applies for both the 2025/26 and 2026/27 tax years.
How the £3,000 Allowance Works
The tax year for CGT runs from 6 April to 5 April. Within that window, you can realise up to £3,000 of net gains without owing anything. Cross the threshold and only the excess is taxable.
Unused allowance does not carry forward. If you sell nothing in a given year, that £3,000 is gone on 6 April. This is why timing matters when you hold several assets you plan to sell: splitting disposals across two tax years gives you two allowances of £3,000 instead of one.
The figure used to be much larger. It stood at £12,300 in 2022/23 before dropping to £6,000 and then to £3,000 from 2024/25 onward.1HM Revenue & Customs. Capital Gains Tax Rates and Allowances Sales that would have been fully sheltered a few years ago now produce a tax bill.
Who Gets the Allowance
Every UK-resident individual has their own £3,000 Annual Exempt Amount. Spouses and civil partners each get one, so a jointly owned asset can be sold with up to £6,000 of gain covered.2GOV.UK. Capital Gains Tax: What You Pay It On, Rates and Allowances Transfers between spouses and civil partners take place at no gain and no loss, which is why moving an asset into joint names before selling is a common way to use both allowances.
Trustees are treated differently. The standard trust allowance for 2026/27 is £1,500, half the individual figure. A trust for a vulnerable beneficiary (for example, a disabled person or a bereaved minor) gets the full £3,000. Where the same person set up more than one trust after 6 June 1978, the £1,500 is split between them, subject to a £300 minimum per trust.3GOV.UK. Trusts and Capital Gains Tax
Personal representatives dealing with a deceased person’s estate use the full individual £3,000. It is available for the tax year of death and the next two tax years, giving up to three years of allowances while the estate is administered.1HM Revenue & Customs. Capital Gains Tax Rates and Allowances
Rates Above the Allowance
From 6 April 2025, the CGT rates are the same for residential property and other chargeable assets. What you pay depends on where your gain sits relative to the basic-rate Income Tax band once added to your taxable income:4GOV.UK. Capital Gains Tax: What You Pay It On, Rates and Allowances
- 18% on gains that fall within the basic-rate band
- 24% on gains that sit above it, or on all your gains if your income already puts you above the basic-rate band
Business Asset Disposal Relief (formerly Entrepreneurs’ Relief) offers a reduced rate on qualifying gains up to a £1 million lifetime limit. That rate is 14% from April 2025 and rises to 18% from April 2026.5House of Commons Library. Capital Gains Tax: Recent Developments
Sales That Do Not Count
Several common disposals never touch your £3,000 at all, because the asset itself is exempt:
- Your main home, where Private Residence Relief usually covers the entire gain. The relief can be reduced if you let part of it out, used part for business, or the grounds are larger than 5,000 square metres.
- Private cars, including classic and vintage vehicles.
- Investments held inside ISAs and PEPs.6GOV.UK. Capital Gains Tax: What You Pay It On, Rates and Allowances
- Personal possessions sold for £6,000 or less per item.7HM Revenue & Customs. Personal Possessions and Capital Gains Tax 2024 (HS293)
- Betting, lottery, and competition winnings.
- Gifts of assets to UK registered charities.
- UK government securities (gilts).
Sales That Do Count
If an asset is not on the exempt list, any profit on selling, gifting, or otherwise disposing of it counts toward your gains for the year:
- Second properties, including buy-to-lets, holiday homes, inherited properties you do not live in, and land.8GOV.UK. Tax When You Sell Property
- Shares, bonds, and funds held outside an ISA or pension.6GOV.UK. Capital Gains Tax: What You Pay It On, Rates and Allowances
- Business assets such as land, buildings, plant, machinery, registered trademarks, and goodwill.9GOV.UK. Capital Gains Tax for Businesses
- Personal possessions sold for more than £6,000. A marginal relief calculation keeps the tax proportionate when proceeds only slightly exceed the threshold.7HM Revenue & Customs. Personal Possessions and Capital Gains Tax 2024 (HS293)
- Cryptoassets. HMRC treats crypto as property, so selling, exchanging, or gifting it can produce a chargeable gain.
Working Out What You Actually Owe
The calculation follows a set order, and the order matters more than most people realise.
Start with each disposal. Take what you sold the asset for (or its market value if you gave it away) and subtract what you paid. You can also deduct incidental costs: stamp duty, legal fees, surveyor and valuer fees, auctioneer commission, and advertising costs to find a buyer.10HM Revenue & Customs. Capital Gains Manual – Expenditure: Incidental Costs of Acquisition and Disposal Money spent on permanent improvements, such as building an extension, is deductible. Routine maintenance and repairs are not.11GOV.UK. Capital Gains Tax for Business: Work Out Your Gain
Next, apply any losses from the same tax year. This is where people get caught out. Current-year losses must be set against current-year gains, even when those gains are already within the £3,000 allowance. You cannot hold a current-year loss back for later, and doing this can effectively waste your Annual Exempt Amount.12GOV.UK. Capital Gains Tax: What You Pay It On, Rates and Allowances: If You Make a Loss
Then bring in losses carried forward from earlier years. These behave more sensibly: you only need to use enough of them to bring your net gain down to £3,000. Anything left stays available for future tax years.12GOV.UK. Capital Gains Tax: What You Pay It On, Rates and Allowances: If You Make a Loss
Finally, deduct the £3,000 Annual Exempt Amount. Whatever is left is taxed at 18% or 24%.2GOV.UK. Capital Gains Tax: What You Pay It On, Rates and Allowances
Reporting and Paying
How you report depends on what you sold. If you dispose of UK residential property at a gain, you have 60 days from the date of completion to report it and pay the tax, using HMRC’s online Capital Gains Tax on UK property service.13GOV.UK. Report and Pay Your Capital Gains Tax: If You Sold a Property in the UK The clock starts at completion, not exchange.
Everything else — shares, crypto, personal possessions, business assets — is reported through Self Assessment. The deadline is 31 January after the tax year ends. A gain made in August 2026 goes on your 2026/27 return, due by 31 January 2028.
Penalties for Missing the Deadlines
A late Self Assessment return triggers an automatic £100 penalty the day after the deadline. After three months, daily penalties of £10 start running for up to 90 days. At six months, there is a further penalty of £300 or 5% of the tax due, whichever is higher, and the same again at twelve months.14GOV.UK. Penalties If You Do Not File Income Tax, Capital Gains Tax and Annual Tax on Enveloped Dwellings Returns on Time
On a late 60-day property return, HMRC applies late filing penalties and charges interest on the unpaid tax from the day after the deadline. On a large property gain, the combined cost adds up quickly.