Capital Gains Tax UK 2026/27: Rates, Allowance, BADR + Reliefs

Capital Gains Tax (CGT) is the tax on profit when you sell or dispose of an asset that has gone up in value. From 6 April 2026 the main rates are 18% (basic-rate band) and 24% (above basic-rate band) - the historic split between residential property + other assets was removed at Autumn Budget 2024. This guide walks through the 2026/27 rules, the annual exempt amount, the BADR rate jump to 18%, and worked examples.

The 2026/27 CGT rates at a glance

Asset / status	Rate
Within unused basic-rate Income Tax band	18%
Above basic-rate band (higher/additional-rate)	24%
Trustees / personal representatives	24%
Business Asset Disposal Relief (BADR)	18% (was 14% 2025/26, 10% pre-April-2025)
Annual exempt amount	£3,000 (£1,500 for trusts)

There is no longer a separate residential-property rate. From 30 October 2024 (Autumn Budget) the main rates rose to 18% / 24% across all asset types - matching what residential property had been paying.

How CGT actually gets calculated

CGT works in 4 steps:

1. Work out the gain: disposal proceeds minus original cost minus allowable enhancement costs (capital improvements) minus disposal costs (legal fees, agent fees).
2. Apply any reliefs: PRR for main home, BADR for trading-business shares, Holdover, Enterprise Investment Scheme (EIS) reinvestment, etc.
3. Deduct the annual exempt amount: £3,000 per person for 2026/27.
4. Apply the rate: depends on your total income + which band the gain falls into.

The gain stacks on top of your taxable income for band-allocation purposes - it doesn’t push your Income into a higher band, but it does mean a basic-rate taxpayer with a big gain typically falls into 24% on the part of the gain that crosses £50,270 of stacked income+gain.

Worked example - higher-rate taxpayer

Sarah earns £80,000 PAYE and sells shares for £20,000 profit:

• Taxable gain: £20,000 - £3,000 AEA = £17,000
• Sarah is already a higher-rate taxpayer (£80k > £50,270)
• CGT rate: 24% across the whole £17,000
• CGT due: £4,080

Pay by 31 January following the tax year of disposal via Self Assessment.

Worked example - basic-rate taxpayer with mid-sized gain

Tom earns £30,000 PAYE and sells a buy-to-let for £45,000 profit:

• Taxable gain: £45,000 - £3,000 AEA = £42,000
• Tom’s taxable income above PA (£30,000 - £12,570) = £17,430
• Unused basic-rate Income Tax band: £37,700 - £17,430 = £20,270 left
• First £20,270 of gain at 18% = £3,649
• Remaining £21,730 of gain at 24% = £5,215
• CGT due: £8,864

For residential property Tom must report + pay within 60 days of completion via HMRC’s online CGT-on-property service (not Self Assessment).

Worked example - BADR-qualifying business disposal

Anna sells her shareholding in her trading company (5%+ shareholding, employee director, 2+ years) for a £600,000 gain:

• BADR-qualifying gain: £600,000 (within £1m lifetime limit)
• Annual Exempt Amount: £3,000 (applies before BADR rate)
• Taxable gain: £597,000
• BADR rate (2026/27): 18%
• CGT due: £107,460

Compare with the same gain without BADR: £597,000 × 24% = £143,280 — BADR saves Anna £35,820.

Note: BADR was 10% pre-April-2025 and 14% in 2025/26 - had Anna sold a year earlier she’d have saved much more. Many founders accelerated disposals into 2024/25 to lock in the 10% rate.

Residential property - the 60-day reporting rule

Selling a UK residential property that isn’t your main home (second home, buy-to-let, inherited property you didn’t move into) triggers a 60-day reporting + payment deadline from completion. You file via HMRC’s online CGT-on-property service, separate from Self Assessment.

Penalties for missing the 60-day window apply even if no CGT is ultimately due (because of PRR, losses, etc):

• 1 day late: £100 fixed penalty
• 3 months late: additional £10/day up to 90 days (£900 max)
• 6 months late: greater of £300 or 5% of tax due
• 12 months late: another £300 or 5%

After the 60-day filing, the gain ALSO appears on your Self Assessment for the year - the 60-day report is a payment-on-account, reconciled with your annual return.

Main reliefs explained

Private Residence Relief (PRR)

Your main home is exempt from CGT, provided you’ve lived there throughout ownership. Key features:

• The final 9 months of ownership always qualify for PRR even after you’ve moved out
• If you let the property for any period, that portion of the gain is taxable (subject to Letting Relief if you shared occupation)
• “Main home” can be elected if you own multiple homes - file a PRR election with HMRC within 2 years of buying a new residence
• Gardens up to 0.5 hectares automatically qualify; larger gardens need to be “reasonably required for enjoyment”

Business Asset Disposal Relief (BADR)

• Lifetime limit £1,000,000 of qualifying gains (cut from £10m in March 2020 Budget)
• Rate stepped from 10% to 14% (April 2025) to 18% (April 2026)
• For shares: must hold ≥5% of ordinary share capital + ≥5% of voting rights + ≥5% of distributable profits AND assets on winding-up (or ≥5% of disposal proceeds in a notional sale) for 2+ years AND be a director/officer/employee throughout. The profits/assets limb was added 29 October 2018 (s.169S(3) TCGA 1992 as amended) to block non-economic share classes from qualifying.
• For sole-trader/partnership business: must have owned for 2+ years and dispose of the whole or part
• Enterprise Management Incentives (EMI) shares qualify on more lenient terms (no 5% requirement)

Holdover Relief

Gift business assets to someone else and BOTH parties elect to “hold over” the gain - the donor pays no CGT but the donee inherits the original (lower) base cost. Triggers CGT when the donee eventually sells. Useful for parent-to-child business succession.

Rollover Relief

Sell one qualifying business asset + buy another in the window from 12 months before the disposal to 3 years after (s.152 TCGA 1992; HMRC may extend in specific circumstances) - the gain on the first is “rolled over” into a reduced base cost of the second. Doesn’t escape CGT, just defers.

EIS / SEIS Reinvestment Relief

Defer gains by reinvesting them in EIS-qualifying or SEIS-qualifying startups. CGT becomes payable when you eventually dispose of the EIS/SEIS shares.

Letting Relief

Severely curtailed from 6 April 2020 - now only available where the landlord shared occupation with the tenant throughout the let period. Caps at the lower of £40,000, PRR amount, or chargeable gain attributable to the letting.

CGT and dividends interaction (basic-rate band stacking)

The 18% vs 24% split depends on whether the gain falls in your unused basic-rate band. Two things stack ahead of the gain:

1. Earned/PAYE income (uses up basic-rate band first)
2. Savings + dividend income (uses up some of the band next)

Then the gain stacks on top to determine 18% vs 24%. So:

• Higher-rate taxpayer (>£50,270 stacked income): everything 24%
• Basic-rate taxpayer with small gain: partly 18% partly 24% depending on what’s left of the band
• Non-taxpayer with one big gain: most of it 18% until basic-rate band is filled, then 24% above

What’s NOT subject to CGT

• Your main home (PRR - unless above the 0.5 ha grounds or had let periods)
• Individual Savings Accounts (ISAs) (Stocks + Shares ISA gains are entirely tax-free)
• UK pensions (DB or DC - gains within the wrapper are exempt)
• Gilts (UK government bonds)
• Premium Bond winnings
• Lottery + gambling winnings
• Personal possessions (chattels) sold for £6,000 or less; for proceeds between £6,000 and £15,000 marginal relief applies - chargeable gain capped at 5/3 × (proceeds - £6,000) per s.262 TCGA 1992
• Cars (private vehicles, not vans/lorries)
• Currency / foreign-currency bank accounts (post-April-2012)

Common pitfalls

Forgetting the 60-day residential rule

UK residential property = 60-day report-and-pay. Miss this and even a £0 gain triggers a £100 fine.

Ignoring acquisition costs

Many sellers compute “sale price minus purchase price” but forget legal fees, agent fees, Stamp Duty Land Tax (SDLT) paid on purchase, and capital improvements (extensions, kitchens, conservatories - NOT decoration or repairs). These reduce the gain.

Treating ISA losses as offsettable

ISA gains are tax-free, BUT ISA losses can’t be used against gains elsewhere. So a £5,000 ISA loss is “wasted” for CGT purposes - whereas a £5,000 loss on a general investment account reduces your taxable gain.

Missing the BADR clock

BADR requires 2 years of qualifying ownership BEFORE disposal. Selling at month 23 = no BADR = 6pp extra tax (24% instead of 18%). Always check qualifying conditions are met for the full 2 years before signing exchange contracts.

Related

• CGT calculator - work out your tax on a gain
• CGT on second home calculator - residential-property specific
• BPR + APR £2.5m cap calculator - April 2026 IHT reform on business + agricultural property
• Dividend tax calculator - the other big “investor” tax
• ISA Millionaire Blueprint 2026/27 - how to keep gains entirely outside CGT