What is Capital Gains Tax?
Capital Gains Tax (CGT) is tax on the profit you make when you sell or give away an asset, such as shares, a second property or business assets.
What Capital Gains Tax means
Capital Gains Tax is charged on the gain, not the whole sale price. The gain is what you receive, less what you paid and allowable costs such as legal fees, stamp duty and improvements. Everyone has an annual exempt amount of £3,000.
Since 30 October 2024 the same rates apply to all assets: 18% on gains that fall within your basic rate band and 24% above it. Your main home is usually exempt under private residence relief, and transfers between spouses or civil partners happen at no gain and no loss. Companies do not pay Capital Gains Tax; their gains are charged to Corporation Tax.
Example
A higher rate taxpayer bought shares for £10,000 and sells them for £25,000 in 2026/27.
| Step | Amount |
|---|---|
| Gain | £15,000 |
| Less annual exempt amount | £3,000 |
| Taxable gain | £12,000 |
| Tax at 24% | £2,880 |
What counts as a disposal
A disposal is not only a sale. Giving an asset away, swapping it for something else, receiving compensation for it, or using cryptoassets to pay for goods can all trigger Capital Gains Tax. Gifts to anyone other than a spouse, civil partner or charity are treated as made at market value, so tax can be due even though no money changed hands.
Common assets that are taxable include shares and funds held outside an ISA or pension, cryptoassets, second homes and buy-to-let property, and business assets such as goodwill. Cars, ISAs, Premium Bonds and UK government gilts are exempt.
Why it matters
Gains on UK residential property must be reported and the tax paid within 60 days of completion. Other gains go on your Self Assessment return by 31 January after the tax year. Losses can be set against gains, and Business Asset Disposal Relief can apply when you sell a business. Try your own figures in our Capital Gains Tax calculator.
Common questions
Usually not. Private residence relief normally exempts the gain on your only or main home for the time you lived there, plus the final nine months of ownership. Relief can be restricted if you let the property, used part of it only for business, or have very large grounds.
Yes. Losses in the same tax year are set against gains first. Unused losses can be carried forward to future years, provided you report them to HMRC within four years of the end of the tax year in which they arose.