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, 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
• 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)
• 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, 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