Even after the recent changes to the capital gains tax, which saw an increase in rates and a cut to the tax-free allowance, the UK is considering ways to raise even more revenue from capital gains, including equalising capital gains tax and income tax rates entirely.
If you own shares, property, or other valuable assets, understanding how UK capital gains tax works now can help you plan ahead of potential changes. In this article, you’ll learn about:
- Current capital gains tax rates
- Assets that are subject to the tax
- Calculation for determining tax liability
What Is Capital Gains Tax in the UK?
Capital gains tax is a tax imposed on the profit you make when you dispose of an asset that has increased in value. The tax is levied only on the gain from the disposal, not the entire amount you receive for an asset.
The sale of an asset is the most common instance of disposal. However, other circumstances can also trigger a disposal, including when you:
- Give an asset as a gift
- Transfer ownership of the asset to someone
- Swap the asset for another asset
- Get compensation for an asset that was damaged or lost
Gifting assets to a spouse or civil law partner usually doesn’t create a capital gains tax liability, as long as you’re not separated and have lived together at least for part of the tax year. This exemption doesn’t apply if you give them an asset to sell through their business.
Charity gifts are also exempt from capital gains tax.
Capital Gains vs Income Tax in the UK
The UK capital gains tax and income tax generate liability on different grounds:
- Liability for capital gains tax comes from disposing of an asset at a profit
- Liability for income tax is triggered by generating revenue from economic activities such as employment, pensions, or renting property
The two taxes also have separate allowances and rates, though your income tax band determines your capital gains tax rate.
Bonus read: Explore our guides on countries with no income tax and those with no capital gains tax.
UK Capital Gains Tax Rate for 2026–2027
The UK capital gains tax has two rates, depending on the income tax band:
| Income Tax Band | Income | Capital Gains Tax Rate |
| Basic rate | Up to GBP 50,270 | 18% |
| Higher or additional rate | GBP 50,271 and more | 24% |
If you’re a higher- or additional-rate taxpayer, you will always pay CGT at the higher rate. However, if you’re a basic-rate taxpayer, you may still pay capital gains tax at the higher rate. To determine which rate applies, you should:
- Calculate your capital gains
- Deduct allowances and losses
- Add your income for the year
If the calculation shows a value that’s within the basic rate band, you will be liable for capital gains tax at the lower rate. If the total is over the higher rate band threshold, you will be liable for the tax at a higher rate.
Trustees and personal representatives of the deceased are always liable for capital gains tax at the higher 24% rate.
Which Assets Are Subject to CGT?
Assets subject to UK capital gains tax can be broadly grouped as follows:
- Personal possessions
- Shares and investments
- Property and land
- Business assets
- Exempt assets
Personal Possessions
If you sell a personal possession for more than GBP 6,000, you may be liable for capital gains tax on the gains from the sale.
While most personal possessions can be subject to the tax, the ones that usually trigger it include:
- Jewerly
- Paintings
- Antiques
- Stamps and coins
Special rules apply if you’re selling personal possessions that come in sets. Disposal of a set is treated as a single disposal with a combined GBP 6,000 threshold instead of separate disposals with distinct thresholds for each item. This rule doesn’t apply if you’re selling pieces of a set to different people.
Shares and Investments
Shares and other investments are typically considered chargeable assets for capital gains tax purposes. This includes:
- Company shares
- Units in trust
- Eligible bonds
However, depending on the type, holding structure, and circumstances of disposal, you can either be exempt from liability for UK capital gains tax on shares and other investments or be eligible for tax relief.
Property and Land
Disposing of most types of property and land can trigger a capital gains tax liability, including:
- Buy-to-let properties
- Business premises and other commercial property
- Land and the buildings on it
- Property you’ve inherited
You might not be liable for UK capital gains tax on property when selling your main home if it meets the criteria for Private Residence Relief.
Business Assets
Business assets that can trigger a capital gains tax liability on disposal include most assets owned by the business or used in running a business, such as:
- Land and buildings
- Plant and machinery
- Shares
- Registered trademarks
- Branding
Self-employed traders and business partnerships are liable for capital gains tax on asset disposal. Limited companies and other types of organisations are subject to corporation tax on the profit they derive from selling assets.
Exempt Assets
Not all assets are subject to capital gains tax. Certain assets are specifically exempt from the tax, including personal-use cars and any assets with a limited lifespan, such as a clock or wine.
Shares and investments that are usually exempt from capital gains tax include:
- Shares you’ve placed in an Individual Savings Account (ISA)
- Shares in an employer Share Incentive Plan (SIP), provided that you meet certain conditions
- Government gilts, including the Premium Bond
- Qualifying corporate bonds
- Employee shareholder shares, on gains under GBP 100,000
Betting, lottery, and pool winnings are not subject to capital gains tax in the UK. As of April 6, 2026, carried interest is exempt from capital gains tax, as it is now subject to standard income tax rates with a multiplier of 72.5%.
UK Capital Gains Tax Allowance and Relief
You are liable for capital gains tax only on the portion of your gains over a certain threshold. This is the capital gains tax allowance, and it can be either:
- GBP 3,000 if you’re an individual, a personal representative or estate executor, or a trustee for a disabled person
- GBP 1,500 if you’re any other type of trustee
Capital Gains Tax Relief for Main Residence
In addition to the tax allowance, you can also be eligible for relief. The most common type of relief is the Private Residence Relief, which exempts your main residence from capital gains tax if the following conditions are met:
- The property has been your only or main residence during your period of ownership
- You haven’t been absent from it during your period of ownership, except for specific approved reasons and within authorised timeframes
- The land on which the property is located, or the surrounding garden, is not larger than half a hectare
- No part of the property has been used exclusively for business purposes while you owned the house
If you have multiple properties, only one can be entitled to Private Residence Relief. However, if a dependent relative lived in one of your other properties, you may also be eligible for relief if you acquired the property before April 6, 1988, and it meets additional criteria.
Capital Gains Tax Relief for Shares
You might also be eligible for tax relief when disposing of shares under certain conditions:
| Relief | Explanation |
| Business Asset Disposal Relief | Pay the lower CGT rate up to a lifetime limit of GBP 1 million on the sale of shares in a trading company where you work, have a minimum of 5% of shares, and have voting rights |
| Gift Hold-Over Relief | Give away shares in a personal or unlisted company without incurring tax liability |
| Enterprise Investment Scheme (EIS) | Use capital gains to buy unlisted shares in EIS-approved companies and reduce or delay CGT liability |
| Seed Enterprise Investment Scheme (SEIS) | Use capital gains to buy shares in SEIS-approved companies and receive tax exemption for up to GBP 200,000 of gains |
| Rollover relief | Sell unlisted shares to trustees of the Share Incentives Plan (SIP) and use the proceeds to purchase new assets to become eligible for a delay on capital gains tax |
Bonus: To learn more about reducing tax liabilities in the UK, read our guides on IHT planning and IHT treatment of trusts, gifts, and foreign assets.
How To Pay UK Capital Gains Tax
Paying UK capital gains tax involves several steps, from establishing whether you have a liability to meeting the relevant reporting and payment requirements. The key considerations are:
- Who pays UK capital gains tax
- How to calculate it
- When and how to pay it
Who Pays UK Capital Gains Tax
Capital gains tax is typically paid by the person who disposes of a chargeable asset at a gain. This can be:
- An individual
- A business owner (a sole trader or business partner)
- A trustee
- A representative of an estate
The rules are slightly different if you’re a non-resident for tax purposes, in which case you are only liable for capital gains tax on the disposed UK land and property. Other UK assets are outside the scope of the tax unless you:
- Return to the UK within five years of leaving, if you had sole UK residence in at least four of the seven tax years immediately before leaving
- Perform an indirect disposal by selling shares in a company with significant property holdings and meeting additional criteria
How To Calculate Capital Gains Tax
Typically, you derive the capital gain on asset disposal by subtracting the asset purchase price from the selling price. In some situations, however, you can use the market value of the asset instead:
- If the asset was a gift, use the market value on the date of gifting
- If you sold it under the market price to help the buyer, use the market value on the date of sale
- If you inherited it and you don’t know the inheritance tax value, use the market value on the date of death
- If you owned the asset before April 1982, use the market value on March 31, 1982
You can get assistance from HM Revenue and Customs regarding the valuation.
You should also deduct certain costs related to the asset acquisition, improvement, and disposal. These include:
- Fees to estate agents, solicitors, valuers, stock brokers, or publications where you advertised the sale of your asset
- Costs of building an extension to your house
- VAT, unless you were able to reclaim it
If the calculation shows you’ve sold an asset at a loss, you can include it in your tax return to offset your losses. If your past losses reduce your gain to the annual exempt amount, any losses that remain can be carried over to future tax years. You can report losses for up to four years after the year in which they occurred.
When and How To Pay Capital Gains Tax
The deadlines for reporting your capital gains vary depending on the type of asset and the reporting method you use.
Upon selling a residential property, you must report and pay the tax within 60 days from the date of sale. You can do both online through the HMRC online services portal. You can also fill out an online form, print it, and send it to HMRC, then pay after receiving the instructions.
If you’re a non-tax resident, you must report the sale even if you’re not liable for capital gains tax on the disposed asset.
For disposals of other types of properties, the deadline depends on how you submit the tax return. If you use a self-assessment tax return, the deadlines for the tax year 2025–2026 are:
- October 31, 2026, if you’re submitting a paper return to HMRC
- January 31, 2027, if you’re submitting a tax return online
The payment deadline is January 31, 2027. Supported methods include online banking, CHAPS, bank transfer, debit or corporate credit cards for online payments, and direct debit. You can no longer pay at the Post Office.
If you use the real-time capital gains tax service, the deadline for reporting the gains you made in the tax year 2025–2026 is December 31, 2026. You must make the payment by January 31, 2027, with supported methods including online payment, bank transfers, and cheques.
Is Capital Gains Tax Set To Change in the UK?
Subsequent UK governments have changed capital gains tax to increase the tax base and extract more revenue. As a result, the country saw an 89% increase in tax liabilities and a 45% increase in CGT taxpayers in the 2024–2025 tax year, compared to the previous year.
The current Labour leadership has called for further changes to the rates until they mirror income tax, which is charged at 20%, 40%, and 45%. The increase would aim to remove the privileged tax status of capital gains relative to employment income and reduce the wealth gap.
The proposal’s supporters cite that it will also generate significant revenue for the government. Its critics warn that the new measures could lead to capital flight, lower investment activity, and longer holding of assets.
Regardless of its future, the proposal serves as further evidence of the UK government’s interest in increasingly aggressive taxation of high-net-worth individuals, especially when considered in the context of recent changes to inheritance tax.
And while the UK is still to enact an exit tax, some high-net-worth individuals are already responding by relinquishing their UK tax residency altogether and building an international strategy to protect their assets from these changes. If you’re considering your own tax exposure to capital gains tax, this might be an option worth exploring. For guidance on relocating your tax residency, contact Nomad Capitalist.
Manage Your Tax Exposure With Nomad Capitalist
Nomad Capitalist is a wealth protection and global mobility advisory firm. We’ve helped more than 1,500 clients advance their international strategy using methods such as:
- Obtaining residence in tax-friendly jurisdictions
- Diversifying assets through investments abroad
- Securing international banking services
We combine all of these methods when we develop Action Plans, custom-built blueprints for achieving our clients’ financial and lifestyle goals. Each Plan we create is built around our clients’ unique circumstances and needs, and it provides clear, properly sequenced steps for achieving their goals with minimal waste of time and resources.
Here’s what partnering with Nomad Capitalist on an Action Plan looks like:
- We ask you to fill out a short form to help us determine whether we’re a good match
- We schedule a 45-minute onboarding call to learn more about your situation and needs
- Your case manager creates an Action Plan and presents it to you for approval
- We implement the Plan over a 12-month period
- You continue receiving support from us even after the Plan is implemented
Nomad Capitalist can help you develop a strategy that will reduce your exposure to UK capital gains tax. We can assist with choosing the most favourable jurisdiction and help you plan the timing of your departure and asset disposals to avoid unnecessary tax liabilities. To get started, contact Nomad Capitalist right away!
