In the UK, the capital gains tax-free allowance for the 2025/2026 tax year is £3,000 per person. Net profits from selling assets up to that figure escape capital gains tax (CGT) entirely; anything above is taxed at 18% or 24% depending on your income band. The US works differently: there is no flat allowance, but long-term gains are taxed at 0% for taxpayers whose income falls below set thresholds, and separate exclusions cover the sale of a main home and inherited assets.
The UK £3,000 Annual Exempt Amount
Every individual gets a £3,000 annual exempt amount for 2025/2026.1GOV.UK. Capital Gains Tax Rates and Allowances Personal representatives dealing with a deceased person’s estate get the same £3,000. Most trusts get half that, £1,500, though trusts with a vulnerable beneficiary such as a disabled person or a child whose parent has died keep the full £3,000.2GOV.UK. Trusts and Capital Gains Tax
Use it or lose it. If you don’t dispose of anything in a tax year, that year’s £3,000 doesn’t roll into the next. The allowance covers your total net gains across the tax year, which runs 6 April to 5 April.3GOV.UK. Self Assessment Tax Returns – Deadlines HMRC pools all your gains together before applying the exemption. A £2,000 profit on one sale plus a £1,500 profit on another leaves £500 taxable after the allowance.
UK Capital Gains Tax Rates for 2025/2026
Above the £3,000 threshold, the rate depends on your income tax band. From 6 April 2025, basic-rate taxpayers pay 18% on chargeable gains and higher-rate or additional-rate taxpayers pay 24%.4GOV.UK. Capital Gains Tax – Rates Those rates now apply to all chargeable assets, including residential property; the earlier split between property gains and other gains is gone.
To work out which rate you pay, stack your taxable gains (after the £3,000 allowance) on top of your taxable income. Anything sitting within the basic-rate band is charged at 18%, and anything pushed above it is charged at 24%.4GOV.UK. Capital Gains Tax – Rates A basic-rate earner can therefore still pay the higher CGT rate on part of a large gain. Trustees and personal representatives pay a flat 24%.
Assets That Sit Outside UK CGT Entirely
Some assets never enter the CGT calculation, so gains on them don’t eat into your £3,000.
Your main home is the biggest one. Private Residence Relief means no CGT when you sell a property that has been your only or main home throughout your ownership, provided the grounds are under 5,000 square metres, no part was used exclusively for business, and you didn’t buy it purely to profit.5GOV.UK. Tax When You Sell Your Home Partial relief may cover the qualifying part of the ownership period if those conditions weren’t met the whole time.6HM Revenue & Customs. HS283 Private Residence Relief 2025
Investments inside an ISA are free of CGT regardless of the gain.7GOV.UK. Individual Savings Accounts – How ISAs Work Government bonds (gilts) and qualifying corporate bonds produce no chargeable gain on disposal.8GOV.UK. Gilt-Edged Securities Exempt from Capital Gains Tax
Personal possessions sold for £6,000 or less are exempt. Furniture, antiques, or art at or below that price produce no CGT and don’t need reporting. A separate rule exempts wasting assets, meaning possessions with a predictable useful life of 50 years or less, at any price. Jewellery, antiques, and fine art aren’t wasting assets because they last longer, so they rely on the £6,000 rule.9HM Revenue & Customs. Personal Possessions and Capital Gains Tax 2024 HS293 Where a set is sold together, the £6,000 limit applies to the whole set rather than each piece.
Reducing a UK CGT Bill: Losses, Spouses, and Business Relief
Selling an asset at a loss produces a capital loss that offsets gains in the same tax year. A £7,000 gain and a £4,000 loss give a net £3,000 gain, which the annual exempt amount covers in full. Current-year losses come off before the £3,000 allowance is applied, so you can’t preserve the allowance by shuffling the order.
If losses exceed gains, the surplus carries forward indefinitely. Carried-forward losses work differently from current-year ones: you only use enough of them to bring your net gains down to the annual exempt amount, keeping the rest in reserve for later years.
Transfers between spouses or civil partners who are living together happen at a no-gain-no-loss value. The receiving partner takes on the original cost basis, and CGT only arises when they eventually sell to a third party. That opens a practical option: if one partner has used their £3,000 and the other hasn’t, transferring the asset before sale can shelter another £3,000 of gain. A jointly owned buy-to-let can use both partners’ allowances, sheltering up to £6,000 between them. The transfer must be a genuine change of ownership documented before the sale. For separating couples, no-gain-no-loss treatment continues until the earlier of three years after the tax year in which they stopped living together, or the date a court grants a divorce or dissolution.10HM Revenue & Customs. HS281 Capital Gains Tax Civil Partners and Spouses
Selling a business or shares in a qualifying trading company can qualify for Business Asset Disposal Relief. From 6 April 2025 the rate is 14%, rising to 18% from 6 April 2026.1GOV.UK. Capital Gains Tax Rates and Allowances A £1 million lifetime cap applies to qualifying gains; anything above is taxed at standard rates. You generally need to have owned the business or held at least 5% of the shares for at least two years before the sale, and the company must be trading rather than an investment vehicle.
Reporting and Paying UK Capital Gains Tax
Once total gains exceed £3,000, you have to report to HMRC. Most people do this through the Self-Assessment return for the year of disposal, though a real-time CGT reporting service lets you report and pay straight after a sale.
Residential property sales not covered by Private Residence Relief have a tighter deadline: report and pay within 60 days of completion.11GOV.UK. Report and Pay Your Capital Gains Tax – If You Sold a Property in the UK on or After 6 April 2020 The gain still needs to appear on the Self-Assessment return afterwards, but the tax itself is due inside those 60 days. This catches sellers off guard often.
A late return draws an automatic £100 penalty, with further daily and percentage-based penalties as the delay grows.12GOV.UK. Penalties for Failure to File Returns on Time Interest runs on unpaid tax from the original due date. Keep purchase prices, sale prices, and associated costs on file; HMRC can query returns years later.
The US 0% Long-Term Capital Gains Bracket
The United States has no flat annual allowance. It has something that can be more generous for lower earners: a 0% federal rate on long-term capital gains when taxable income sits below set thresholds. For the 2026 tax year, the 0% rate applies up to $49,450 for single filers and $98,900 for married couples filing jointly.13Tax Foundation. 2026 Tax Brackets and Federal Income Tax Rates Sizeable gains can pass through untaxed under that band.
Long-term gains are profits on assets held more than one year.14Office of the Law Revision Counsel. 26 US Code 1222 – Other Terms Relating to Capital Gains and Losses Above the 0% bracket:
- 15% for single filers with taxable income from $49,451 to $545,500 (married filing jointly: $98,901 to $613,700)
- 20% for single filers above $545,500 (married filing jointly: above $613,700)
Short-term gains, on assets held a year or less, are taxed as ordinary income at rates that run from 10% to 37% for 2026. High earners also face the 3.8% Net Investment Income Tax on capital gains once modified adjusted gross income clears $200,000 (single) or $250,000 (joint), pushing the effective top long-term rate to 23.8%.15Office of the Law Revision Counsel. 26 US Code 1 – Tax Imposed
US Exclusions That Function Like an Allowance
Home Sale Exclusion
Under Section 121, if you have owned and lived in your home as your primary residence for at least two of the five years before the sale, you can exclude up to $250,000 of gain from federal income tax. Married couples filing jointly can exclude up to $500,000, provided at least one spouse meets the ownership test and both meet the use test.16Office of the Law Revision Counsel. 26 US Code 121 – Exclusion of Gain from Sale of Principal Residence Those figures aren’t indexed to inflation and have not moved since 1997.
If you fall short of the two-year mark because of a work move, health reasons, or certain unforeseen circumstances, you can claim a partial exclusion pro-rated on how much of the two-year period you did meet.16Office of the Law Revision Counsel. 26 US Code 121 – Exclusion of Gain from Sale of Principal Residence A surviving spouse who sells within two years of the other spouse’s death can use the full $500,000 exclusion on a joint return for that year.
Stepped-Up Basis on Inherited Assets
When you inherit an asset in the US, its tax basis resets to fair market value on the date the original owner died.17Internal Revenue Service. Gifts and Inheritances If a parent bought stock for $10,000 that was worth $100,000 at death, your basis is $100,000; selling it the next day at $100,000 produces no taxable gain. A lifetime of unrealised appreciation effectively falls out of the tax base. The executor can instead elect a valuation date six months after death if filing an estate tax return.
Spousal Transfers
Transfers between US spouses produce no taxable gain. The receiving spouse inherits the transferring spouse’s cost basis, and no tax is recognised at the transfer itself. The rule covers transfers during marriage and transfers related to a divorce, provided the transfer happens within one year of the marriage ending or is specifically tied to the divorce settlement.16Office of the Law Revision Counsel. 26 US Code 121 – Exclusion of Gain from Sale of Principal Residence
US Capital Losses and Reporting
Capital losses offset capital gains in the same tax year. When losses exceed gains, up to $3,000 of net capital losses can be deducted against ordinary income each year, or $1,500 if married filing separately.18Office of the Law Revision Counsel. 26 US Code 1211 – Limitation on Capital Losses Any remainder carries forward indefinitely.
Watch the wash sale rule. Selling an investment at a loss and buying the same or a substantially identical security within 30 days before or after the sale disallows the loss for the current year. The disallowed amount is added to the basis of the replacement security, so it isn’t gone forever, but it can’t cut this year’s tax. The 30-day window crosses year ends, so selling in late December and buying back in early January still triggers it.
Individual transactions are reported on Form 8949 and summarised on Schedule D of the annual return.19Internal Revenue Service. Instructions for Form 8949 Brokerages issue Form 1099-B with transaction data, but the taxpayer is responsible for confirming cost basis and holding period. Unlike the UK’s 60-day property window, US capital gains sit on the annual return under the standard April filing deadline.