Capital Gains Tax Guide 2025-26: Rates, Allowances & How to Pay

Q: Do I pay Capital Gains Tax on my home?

No, in most cases. Your main home is exempt from Capital Gains Tax under Private Residence Relief (PRR), provided you lived in it as your main home throughout ownership. If you have let the property or used part of it exclusively for business, partial CGT may apply to those periods. A second home or buy-to-let property does not qualify for PRR and is fully subject to CGT at 18% (basic rate) or 24% (higher rate).

Q: How do I report Capital Gains Tax?

For residential property disposals, you must report and pay CGT within 60 days of completion using the HMRC online UK Property service — even if you also file a Self Assessment return. For other assets (shares, business assets), you report CGT via your annual Self Assessment tax return if your gains exceed the Annual Exempt Amount (£3,000) or total proceeds exceed £12,000. You do not need to report if your gains are fully covered by the exemption and losses.

Q: Can I offset losses against gains?

Yes. Capital losses from the same tax year are automatically set against capital gains before the Annual Exempt Amount is applied. If losses exceed gains in a year, you can carry the surplus losses forward to offset gains in future years. You must claim losses within 4 years of the end of the tax year in which they arose. Losses cannot normally be used against income — they can only offset capital gains.

CGT is charged on the profit when you sell certain assets. The rates and exemptions changed significantly in October 2024. Here is everything you need to know for 2025-26.

CGT example: £25,000 sale of shares bought for £10,000 — basic-rate taxpayer pays £2,160

What is Capital Gains Tax?

Capital Gains Tax (CGT) is charged on the profit (gain) you make when you sell or dispose of certain assets. You pay CGT on the gain — not the total proceeds. If you bought shares for £10,000 and sold them for £25,000, your gain is £15,000. After the Annual Exempt Amount of £3,000, your taxable gain is £12,000.

Assets Subject to CGT

CGT applies to gains from:

Shares and unit trusts held outside an ISA or pension
Second homes and buy-to-let properties
Business assets (equipment, goodwill, business premises)
Valuable personal possessions worth more than £6,000 (jewellery, antiques, art)
Cryptocurrency
Foreign property and assets

Not subject to CGT: your main home (Private Residence Relief), ISA investments, NS&I Premium Bonds, betting and lottery winnings, personal cars, and gilts (UK government bonds).

CGT Rates 2025-26

Following changes announced in the October 2024 Budget, CGT rates were unified across most asset classes from that date:

Asset Type	Basic Rate Taxpayer	Higher/Additional Rate
Residential property	18%	24%
Shares & other assets	18%	24%
Business Asset Disposal Relief	14%	14%

Business Asset Disposal Relief (BADR — formerly Entrepreneurs' Relief) was 10% until October 2024, rising to 14% for disposals from October 2024 onwards, and will increase again to 18% from April 2026.

Your rate depends on your total income for the year. CGT is added on top of your income to determine which band it falls into. If you have £30,000 of other income and a £20,000 taxable gain, the first £7,700 of the gain falls in the basic-rate band (at 18%) and the remaining £12,300 falls in the higher-rate band (at 24%).

Annual Exempt Amount

Every individual has an Annual Exempt Amount (AEA) — gains up to this threshold are completely free of CGT. For 2025-26 the AEA is £3,000. This has been dramatically reduced from £12,300 in 2022-23. Spouses and civil partners each have their own AEA and can transfer assets between themselves with no CGT, making it worth considering which partner holds which assets before disposal.

Worked Example

You sell shares outside an ISA. You bought them for £10,000 and sell for £25,000. Your salary is £35,000 (basic rate taxpayer throughout).

Total gain: £25,000 − £10,000 = £15,000
Minus AEA: £15,000 − £3,000 = £12,000 taxable gain
Your income already uses £35,000 − £12,570 = £22,430 of the £37,700 basic-rate band
Remaining basic-rate band: £37,700 − £22,430 = £15,270 — all £12,000 fits within this
CGT: £12,000 × 18% = £2,160

Reporting and Paying CGT

Residential property: must be reported and paid within 60 days of completion via HMRC's online UK Property service. This is separate from Self Assessment.

Other assets: report via your annual Self Assessment return if your gains exceed the AEA (£3,000) or total proceeds exceed 4 × AEA (£12,000). The tax is due by 31 January following the end of the tax year.

Frequently Asked Questions

Do I pay Capital Gains Tax on my home?

No, in most cases. Your main home is exempt under Private Residence Relief, provided you lived in it throughout ownership. Second homes and buy-to-let properties are fully subject to CGT at 18% or 24%.

How do I report Capital Gains Tax?

For residential property, report within 60 days of completion via the HMRC UK Property service. For other assets, report via Self Assessment if gains exceed £3,000 or proceeds exceed £12,000.

Can I offset losses against gains?

Yes. Current-year losses are set against current-year gains first. Surplus losses carry forward indefinitely to offset future gains. Losses cannot normally offset income — only capital gains.