UK Capital Gains Tax 2026/27: rates, the £3,000 allowance, and the 60-day property reporting trap

UK Capital Gains Tax rates 2026/27

Capital Gains Tax (CGT) applies when you sell or otherwise dispose of an asset that has gone up in value. You pay tax on the gain only, not the whole sale price. From 30 October 2024 onwards the rates for property and most other assets are aligned at 18% / 24%. For 2026/27:

Whether you are a 'basic' or 'higher rate' taxpayer for CGT purposes is decided by stacking the gain on top of your other income for the year. So someone with a £30,000 salary and a £15,000 gain on a buy-to-let property would have £5,000 of the gain in the basic rate band (taxed at 18%) and £10,000 in the higher rate band (taxed at 24%).

The £3,000 annual exempt amount

Every UK individual has an annual exempt amount of £3,000 for 2026/27. Net gains up to this figure are tax-free; only the excess is taxed.

This allowance has been cut hard in recent years:

• 2022/23: £12,300
• 2023/24: £6,000
• 2024/25 onwards: £3,000

The reduction means a lot more disposals now produce a CGT bill, particularly for landlords with rising property prices. A modest portfolio sale that would have escaped tax entirely three years ago will now usually trigger a charge.

Worked example: selling a buy-to-let in 2026/27

Take a higher-rate-taxpayer landlord (income above £50,270) selling a buy-to-let bought in 2018 for £180,000 and now worth £280,000:

• Sale proceeds: £280,000
• Less: original purchase price: £180,000
• Less: SDLT and legal fees on purchase: £6,000
• Less: legal and estate agent fees on sale: £5,000
• Less: documented capital improvements (new roof): £8,000
• Gross gain: £81,000
• Less: annual exempt amount: £3,000
• Taxable gain: £78,000
• CGT at 24% (higher rate property): £18,720

The CGT must be reported and paid within 60 days of completion through the HMRC CGT on UK Property online service. The same gain is also reported in the annual Self Assessment return for that tax year, but the tax was already paid via the 60-day return.

The 60-day property reporting rule

The 60-day rule applies to UK-resident individuals (and trustees) disposing of UK residential property at a gain. Three key points:

• The clock starts on completion, not on exchange or contract signing.
• You submit a separate online return (CGT PPD) at gov.uk/report-and-pay-your-capital-gains-tax. The return is in addition to Self Assessment, not instead of it.
• Late filing penalties bite quickly. £100 immediately, escalating in the same way as SA late filing. And the tax is overdue from day 61 onwards, so interest runs.

Where the gain is fully covered by losses or the annual exempt amount, no 60-day return is needed. But if any CGT is due, the 60-day window is hard, missing it is one of the single most common penalty causes we see.

Non-residents disposing of UK property must report all disposals (gain or loss) within 60 days, regardless.

Capital losses, the partial silver lining

When a disposal produces a loss, you can offset it against gains in the same year. Unused current-year losses are carried forward indefinitely to be used against future gains.

The mechanics are slightly counter-intuitive:

• Same-year losses are applied before the annual exempt amount, so a £5,000 loss can wipe out £5,000 of gain before you even use the £3,000 exemption.
• Brought-forward losses are applied after the annual exempt amount. This protects the £3,000 from being eaten by a prior-year loss when you have a modest gain.
• Losses must be claimed within 4 years of the tax year they arise in, by reporting them in your Self Assessment return for that year.

A common planning lever for portfolios: realising a paper loss to offset a known gain elsewhere. This works well with shares (you can sell and buy back after 30 days), although property is much harder to time around.

Business Asset Disposal Relief (BADR)

BADR (formerly known as Entrepreneurs' Relief) reduces the CGT rate on qualifying business disposals to 18% for 2026/27, up from 14% in 2025/26 and 10% before then. The relief is capped at a £1 million lifetime limit of qualifying gains.

The most common qualifying disposals:

• Sale of a sole trader business that has been trading
• Sale of a partnership interest
• Sale of shares in a personal trading company where you are an officer or employee owning at least 5% of the share capital
• Sale of assets used in a trade after the trade has ceased (with strict timing requirements)

The qualifying conditions (in particular the 5% / officer tests for shares, and the 24-month period of ownership) are strict and easy to fail accidentally if you have been moving shares around. For any business owner considering an exit, we model the BADR position 18 to 24 months ahead so any remedial moves can be made.

What is exempt from CGT

• Your main home. Sales of your only or main residence are usually fully exempt under Private Residence Relief, although it gets complicated if you have ever let it out, used part of it for business, or own more than one property.
• ISA holdings. Shares, funds, and bonds inside an ISA are CGT-free on disposal.
• Pension fund holdings. Same as ISAs, growth inside a pension is not subject to CGT.
• Cars (private use). The car you drive is not a chargeable asset.
• Personal items worth £6,000 or less. Chattels (jewellery, art, antiques) under £6,000 per item are exempt. Sets of items are aggregated.
• Premium Bonds, lottery and betting winnings. Not capital gains at all in tax terms.
• Gifts between spouses and civil partners. Transferred at base cost, no gain triggered. Useful for planning, see below.

Three planning levers for CGT

1. Use both spouses' annual exempt amounts

Each spouse has a separate £3,000 allowance and (potentially) basic rate band. Transferring a partial interest to a spouse before sale can double the tax-free chunk and shift part of the gain into a lower band. The transfer is no-gain-no-loss, so no CGT is triggered on the spouse-to-spouse move.

2. Phase disposals across tax years

Where you have multiple disposals planned, splitting them across 5 April can use the allowance twice. £3,000 in March and £3,000 in April is £6,000 of tax-free gain instead of £3,000.

3. Pension contributions to extend the basic rate band

Personal pension contributions extend the basic rate band by the gross contribution. So a £10,000 pension contribution pushes the basic rate threshold from £50,270 to £62,770, giving you £12,500 more headroom at the basic CGT rate (18%) instead of the higher rate (24%).