Capital Gains Tax Calculator 2025/26

How Capital Gains Tax Works in the UK

Capital Gains Tax (CGT) is a tax charged on the profit you make when you sell, give away, or otherwise dispose of an asset that has increased in value. The tax applies to the gain itself, not the total sale proceeds. In the UK, CGT is administered by HM Revenue and Customs (HMRC) and is payable by individuals, trustees, and personal representatives of deceased persons. Companies pay corporation tax on their gains instead.

The calculation of CGT follows a straightforward process. First, you determine the gain by subtracting the original purchase price and any allowable costs from the sale price. Allowable costs include purchase expenses (solicitor fees, stamp duty, surveyor fees), sale expenses (estate agent fees, solicitor fees), and any capital improvements made to the asset during ownership. Routine maintenance and repair costs are not deductible.

Once you have calculated the gain, you can deduct the annual exempt amount (£3,000 for 2025/26). If you have capital losses from other disposals in the same tax year, these can also be offset against your gains before the annual exempt amount is applied. The remaining amount is your taxable gain, which is then taxed at the appropriate CGT rate based on your income level and the type of asset.

CGT is charged at different rates depending on whether the asset is residential property or another type of asset such as shares, and whether the gain falls within the basic rate or higher rate income tax band. Your total taxable income determines how much of the basic rate band is available for your capital gains. If your income already exceeds the basic rate limit of £50,270, all of your gains will be taxed at the higher CGT rate.

CGT Rates for 2025/26

The basic rate applies to gains that, when added to your taxable income, fall within the basic rate band (up to £50,270 in total). The higher rate applies to gains that exceed the basic rate band. If your gain straddles the boundary, part will be taxed at the basic rate and the remainder at the higher rate.

Residential property attracts higher CGT rates than other assets. This applies to buy-to-let properties, second homes, and any residential property that is not your principal private residence. The rates were increased from 18% and 28% to 18% and 24% respectively from October 2024, and these rates continue for 2025/26. Your main home is generally exempt from CGT under Private Residence Relief.

Annual Exempt Amount — £3,000 for 2025/26

Every individual has an annual exempt amount (AEA), sometimes called the CGT allowance or annual free amount. For the 2025/26 tax year, this is £3,000. The AEA has been significantly reduced in recent years:

• 2022/23: £12,300
• 2023/24: £6,000
• 2024/25: £3,000
• 2025/26: £3,000

The reduction from £12,300 to £3,000 over three years means that many more people now face CGT charges on relatively modest gains. A gain of £5,000 that would have been entirely tax-free in 2022/23 now attracts CGT on £2,000 of the gain. This makes tax planning around CGT more important than ever.

The annual exempt amount cannot be carried forward to future tax years. If you do not use it in a particular year, it is lost. This creates an incentive to spread asset disposals across multiple tax years where possible. Each person has their own AEA, so married couples and civil partners can effectively double their exemption by each making separate disposals.

CGT on Shares and Investments

When you sell shares, the gain is calculated as the sale proceeds minus the purchase price and any allowable costs (broker commissions, stamp duty reserve tax). If you bought shares at different times and prices, you need to use the share identification rules to determine which shares you are selling and at what cost. The rules match shares sold in this order:

• Same-day rule: shares bought on the same day as the sale
• Bed and breakfast rule: shares bought within 30 days after the sale (to prevent selling and immediately rebuying to crystallise a gain or loss)
• Section 104 pool: all remaining shares are pooled together at their average cost

Shares held within an Individual Savings Account (ISA) are completely exempt from CGT, regardless of the size of the gain. This makes ISAs an extremely valuable tax shelter. For the 2025/26 tax year, you can invest up to £20,000 into ISAs. Shares held in a Self-Invested Personal Pension (SIPP) are also exempt from CGT, though different tax rules apply on withdrawal.

Employee share schemes such as Enterprise Management Incentives (EMI), Company Share Option Plans (CSOP), and Share Incentive Plans (SIP) may have special CGT treatment. EMI shares qualifying for Business Asset Disposal Relief are taxed at a flat 10% rate on gains up to the £1 million lifetime limit. It is important to understand the specific rules for your share scheme before disposing of shares.

CGT on Residential Property

Residential property disposals attract higher CGT rates (18% and 24%) compared to other assets (10% and 20%). However, there are several important reliefs that can reduce or eliminate the CGT charge on property:

Private Residence Relief (PRR) exempts your main home from CGT entirely if you have lived in it as your only or main residence throughout your period of ownership. If you have lived in the property for part of the time, you receive proportional relief. The last 9 months of ownership always qualify for PRR, even if you were not living in the property at the time of sale.

Letting Relief is available if you let out your main home (or former main home) as residential accommodation during a period when you would not otherwise qualify for PRR. The relief is limited to the lowest of: the PRR amount, the gain attributable to the letting period, or £40,000. Since April 2020, letting relief only applies where the owner is in shared occupation with the tenant.

For buy-to-let and second homes, there is no PRR, so the full gain is subject to CGT. However, you can deduct allowable costs including the purchase price, stamp duty paid on purchase, solicitor and surveyor fees, estate agent fees on sale, and any capital improvements (extensions, conversions, new kitchens etc). Routine maintenance, repairs, and mortgage interest cannot be deducted for CGT purposes, though mortgage interest may be deductible against rental income for income tax purposes.

A key difference for property disposals is the reporting and payment deadline. UK residents selling UK residential property must report and pay any CGT within 60 days of completion using the HMRC Capital Gains Tax on UK property account. This is separate from your annual Self Assessment tax return, and failing to report within 60 days can result in penalties and interest charges.

How to Reduce Your CGT Bill

There are several legitimate strategies to minimise Capital Gains Tax:

1. Use Your Annual Exempt Amount

The simplest strategy is to ensure you use your £3,000 annual exempt amount each year. If you have a large gain on an asset, consider whether you can split the disposal across two or more tax years to benefit from multiple annual exemptions. For shares, this means selling a portion before 5 April and the remainder after, though be aware of the 30-day bed and breakfast rule if you plan to repurchase.

2. Transfer to Spouse or Civil Partner

Transfers between spouses and civil partners are exempt from CGT. This means you can transfer an asset to your partner before they sell it, allowing them to use their own annual exempt amount and potentially benefit from a lower CGT rate if their income is in a lower tax band. A married couple can shelter up to £6,000 of gains annually between their two exemptions.

3. Invest via ISAs and Pensions

Any gains made within an ISA or pension wrapper are completely exempt from CGT. If you are regularly buying and selling investments, doing so within an ISA eliminates CGT entirely. You can invest up to £20,000 per year in ISAs. For existing investments, consider selling shares outside your ISA (using your annual exemption) and rebuying within the ISA wrapper, known as "Bed and ISA."

4. Offset Capital Losses

Capital losses from other disposals in the same tax year must be offset against gains before the annual exempt amount is applied. If you have investments that have fallen in value, selling them to crystallise a loss can reduce your CGT on profitable disposals. Unused capital losses can be carried forward indefinitely and used against gains in future tax years.

5. Business Asset Disposal Relief

If you are selling a business or shares in a qualifying trading company, you may be eligible for Business Asset Disposal Relief (formerly Entrepreneurs Relief). This provides a reduced CGT rate of 10% on qualifying gains up to a £1 million lifetime limit. To qualify, you typically need to have been a director or employee of the company and held at least 5% of the shares for at least two years.

Reporting and Payment Deadlines

The deadlines for reporting and paying CGT depend on the type of asset:

UK Residential Property

If you sell UK residential property and owe CGT, you must report and pay the tax within 60 days of the completion date. You do this through the HMRC Capital Gains Tax on UK property service (not your Self Assessment tax return). You still need to include the gain on your Self Assessment return at the end of the tax year, and any CGT already paid through the 60-day service will be credited against your final bill. Late reporting can result in a £100 fixed penalty, with further penalties for continued failure to report.

Other Assets (Shares, Investments, etc.)

For assets other than UK residential property, you report gains through your annual Self Assessment tax return. The deadline for the online return is 31 January following the end of the tax year (so 31 January 2027 for gains made in the 2025/26 tax year). The CGT payment is due at the same time as any outstanding income tax. If you do not usually file a Self Assessment return, you may need to register for one if your gains exceed the reporting threshold.

Worked Examples

Example 1: Selling Shares as a Basic Rate Taxpayer

Sarah has a salary of £35,000 and sells shares for £25,000 that she originally bought for £12,000. Her broker charged £50 on purchase and £50 on sale.

• Sale proceeds: £25,000
• Purchase price: £12,000
• Allowable costs: £50 + £50 = £100
• Total gain: £25,000 - £12,000 - £100 = £12,900
• Annual exempt amount: £3,000
• Taxable gain: £12,900 - £3,000 = £9,900
• Basic rate band remaining: £50,270 - £35,000 = £15,270
• All £9,900 within basic rate band
• CGT at 10%: £9,900 x 10% = £990

Example 2: Selling a Buy-to-Let Property

James has a salary of £55,000 and sells a buy-to-let flat for £300,000. He bought it for £200,000 and paid £6,000 in stamp duty, £1,500 in solicitor fees on purchase, and spent £15,000 on a new kitchen and bathroom (capital improvements). His estate agent charged £4,500 and solicitor charged £1,500 on the sale.

• Sale proceeds: £300,000
• Purchase price: £200,000
• Purchase costs: £6,000 + £1,500 = £7,500
• Improvements: £15,000
• Sale costs: £4,500 + £1,500 = £6,000
• Total gain: £300,000 - £200,000 - £7,500 - £15,000 - £6,000 = £71,500
• Annual exempt amount: £3,000
• Taxable gain: £71,500 - £3,000 = £68,500
• Basic rate band remaining: £50,270 - £55,000 = £0 (income exceeds basic rate limit)
• All at higher rate (24%): £68,500 x 24% = £16,440

Example 3: Gain Spanning the Tax Band Boundary

Maria has a salary of £45,000 and sells shares for £30,000 that she bought for £10,000. No other costs or gains.

• Total gain: £30,000 - £10,000 = £20,000
• Taxable gain: £20,000 - £3,000 = £17,000
• Basic rate band remaining: £50,270 - £45,000 = £5,270
• Basic rate portion: £5,270 at 10% = £527
• Higher rate portion: £17,000 - £5,270 = £11,730 at 20% = £2,346
• Total CGT: £527 + £2,346 = £2,873

Common Mistakes with Capital Gains Tax

1. Forgetting to Include All Allowable Costs

Many people only deduct the purchase price from the sale proceeds and forget about allowable costs. Stamp duty paid on purchase, solicitor and surveyor fees, broker commissions, and capital improvements can all be deducted. These costs can significantly reduce your taxable gain and the CGT payable. Keep records of all expenses related to acquiring, improving, and disposing of assets.

2. Missing the 60-Day Deadline for Property

Since April 2020, UK residential property disposals must be reported and CGT paid within 60 days of completion. This catches many people by surprise, especially first-time sellers of buy-to-let or inherited property. Missing the deadline results in automatic penalties and interest charges on the unpaid tax.

3. Not Considering Income When Calculating CGT Rate

Your CGT rate depends on your total taxable income, not just the gain. If you expect a particularly large gain, consider whether it makes sense to time the disposal in a year when your income is lower (for example, between jobs or in retirement) to benefit from the lower basic rate of CGT.

4. Wasting the Annual Exempt Amount

The £3,000 annual exempt amount is a use-it-or-lose-it allowance. If you have assets with built-up gains, selling enough each year to use your exemption can save significant tax over time. This is sometimes called "CGT harvesting" and is particularly useful for share portfolios where you can sell and rebuy within an ISA wrapper.

5. Ignoring the Bed and Breakfast Rule

If you sell shares and repurchase the same shares within 30 days, the gain or loss is calculated using the repurchase price, not the original cost. This prevents you from crystallising a loss or gain while effectively retaining the same investment. To avoid this rule, you can wait 31 days before repurchasing, or have your spouse buy the shares, or repurchase within an ISA (known as "Bed and ISA").