Capital Gains Tax UK 2026/27: How Much Will You Pay?

Selling a second home, some shares, or another valuable asset for more than you paid for it can trigger a tax bill you didn't budget for. Capital Gains Tax catches a lot of people out simply because they don't realise it applies until the sale has already gone through. Our Capital Gains Tax Calculator gives you an instant estimate, but it helps to understand how the rules actually work first, so here's what counts as a gain, what you'll pay, and how to keep your bill as low as legally possible.

What counts as a capital gain

A capital gain is the profit you make when you sell or dispose of an asset for more than you paid for it. The most common examples are a second home or buy-to-let property, shares and funds held outside an ISA or pension, and valuable personal possessions worth more than £6,000, such as art or jewellery. Your main home is normally exempt under Private Residence Relief, and so are gains inside an ISA or pension, most personal cars, and UK government bonds. Disposal doesn't just mean a straightforward sale either. Gifting an asset, swapping it for something else, or transferring it to a trust can all count as a disposal for Capital Gains Tax purposes, even though no cash changes hands.

The annual exempt amount

Everyone gets a tax-free allowance for capital gains each year, known as the annual exempt amount. For 2026/27, it's £3,000. You only pay Capital Gains Tax on the portion of your total gains for the year that sits above this figure. It applies per person, not per asset, so if you sell more than one thing in the same tax year, all the gains are added together before the allowance is deducted. Unlike some other allowances, it can't be carried forward if you don't use it, so a gain realised just after 6 April gets a fresh £3,000 to work with rather than sharing one with the previous year.

CGT rates: basic rate vs higher rate

Since the October 2024 Budget, most chargeable assets share the same two-tier rate structure, whether you're selling a rental property, shares, or another taxable asset. Which rate you pay depends on your total taxable income for the year, including the gain itself.

If your income and gain together straddle both bands, only the portion that falls above the basic rate threshold is taxed at 24%, the rest is taxed at 18%. That's exactly the calculation our Capital Gains Tax Calculator does automatically once you enter your income and gain.

How to work out your gain

The basic formula is your sale price, minus what you originally paid, minus allowable costs, minus the annual exempt amount. Allowable costs include things like Stamp Duty Land Tax paid on purchase, estate agent and solicitor fees, and the cost of any capital improvements, such as an extension, though not routine maintenance or decorating. Whatever's left after subtracting the £3,000 exemption is your taxable gain, and that's the figure the 18% or 24% rate is applied to.

Worked example: selling a rental property

Say you bought a buy-to-let flat for £220,000 several years ago and sell it today for £310,000. That's a gross gain of £90,000. You also paid £5,000 in total between Stamp Duty on purchase, legal fees, and estate agent fees on the sale, which are allowable costs, bringing your gain down to £85,000. Subtract the £3,000 annual exempt amount and your taxable gain is £82,000.

If your total income for the year kept you in the basic rate band throughout, the same £82,000 taxable gain would instead be charged at 18%, coming to £14,760 rather than £19,680, a difference of nearly £5,000. This is exactly why knowing your tax band before you sell matters. Check yours first with our Income Tax Calculator.

Ways to reduce your CGT bill

There are several legitimate ways to bring a Capital Gains Tax bill down, rather than trying to avoid it altogether.

• Use your ISA allowance. Gains on investments held inside a Stocks and Shares ISA are completely free of Capital Gains Tax. Moving new money into an ISA each year using our ISA Calculator to check your allowance is one of the simplest ways to shelter future gains.
• Time your sale across tax years. If a gain is close to pushing you well over your annual exempt amount, splitting a sale so part falls in one tax year and part in the next can let you use two years' allowances instead of one, though this depends on the type of asset and isn't always practical.
• Transfer assets to your spouse or civil partner first. Transfers between spouses living together are free of Capital Gains Tax, so jointly owning an asset before selling can effectively double the annual exempt amount available against the same gain.
• Offset losses. Capital losses from other investments in the same tax year, or brought forward from previous years, can be deducted from your gains before tax is worked out, provided you've reported the loss to HMRC.

Reporting and paying CGT

How and when you report a gain depends on what you've sold. For UK residential property that isn't your main home, you must report the sale and pay any Capital Gains Tax due within 60 days of completion, using HMRC's dedicated online property service, separate from your regular tax return. For shares, funds and most other assets, you normally report the gain through Self Assessment by the following 31 January, alongside any other tax you owe for the year, which our Self-Employed Tax Calculator can help you plan for if you're already filing a return.

Common mistakes

• Forgetting the 60-day property deadline. Missing it brings an automatic penalty even if you eventually pay the right amount through Self Assessment.
• Leaving out allowable costs. Stamp Duty, legal fees, and agent fees on both purchase and sale can all reduce your taxable gain, but only if you keep the paperwork to prove them.
• Assuming your main home is always exempt. If you've let out part of the property, used a room exclusively for business, or lived elsewhere for a stretch of ownership, Private Residence Relief may only cover part of the gain.
• Not checking your tax band before selling. A large gain can push your total income into the higher rate band for the year, even if your salary alone wouldn't, so it's worth checking with our Income Tax Calculator before assuming you'll pay the lower 18% rate.

For more on how your overall income tax position is worked out, see our guide to UK Income Tax 2026/27, and for a look at how ISAs shelter growth from tax entirely, read how compound interest actually works.

Frequently asked questions