Capital Gains Tax (CGT) — 2025/26 UK Guide

A clear, professional and complete guide for investors and property owners

Read the Article

What is Capital Gains Tax?

Capital Gains Tax (CGT) is the tax charged on the profit you make when you dispose of an asset that has increased in value. The tax is applied to the gain — the difference between what you sold the asset for and what you paid for it — not to the total sale price.

Example:

If you bought a painting for £5,000 and later sold it for £25,000, your gain is £20,000. CGT is charged on that £20,000 (after any relevant allowances and reliefs), not on the £25,000 sale price.

Why CGT matters CGT directly affects your net return and final ROI. This is particularly critical for landlords and property investors, where disposal taxes can materially reduce realised profits. Knowing how and when CGT applies lets you plan disposals, use reliefs and offset allowable losses to manage tax efficiently.

Key points for 2026 (what changed and what to watch)

• CGT is separate from Income Tax, but the rates you pay depend on your Income Tax band.

• The 60‑day rule: For disposals of UK residential property that is not your main home, you must report the sale and pay any CGT due within 60 days of completion.

• Harmonised rates: Following the October 2024 Budget, the main CGT rates for most assets are aligned — 18% for gains taxed at the basic Income Tax band and 24% for gains taxed at the higher/additional rate.

• Reduced allowance: The Annual Exempt Amount (the tax‑free CGT allowance) is £3,000 for individuals in the 2025/26 tax year.

When do you pay Capital Gains Tax? CGT is payable when you “dispose” of an asset. Disposal covers multiple events, not only a sale for cash:

• Selling an asset for money.

• Gifting an asset to someone other than your spouse or civil partner.

• Swapping one asset for another.

• Receiving compensation for an asset lost or destroyed.

• Transferring an asset into certain types of companies or trusts.

Note: Transfers between spouses or civil partners are generally exempt for CGT at the time of transfer. However, if the recipient later disposes of the asset, they may be liable for CGT on any subsequent gain.

Which assets are subject to CGT? CGT applies to “chargeable assets,” including (but not limited to):

• Property: Second homes, buy‑to‑let properties and land. (Your primary residence is usually exempt under Private Residence Relief.)

• Investments: Shares not held within tax‑advantaged wrappers such as ISAs.

• Business assets: Machinery, registered trademarks, or shares in a private company.

• Personal possessions: Items worth more than £6,000 (excluding cars) — e.g., paintings, antiques, jewellery.

• Cryptocurrency: Crypto disposals are subject to CGT.

2025/26 rates & allowances — the numbers you need

1. Annual Exempt Amount

   1. Individuals: £3,000 (2025/26).

   2. Trusts: £1,500. You only pay CGT on total gains above this allowance.

2. CGT rates for most assets (including residential property)

   1. Basic‑rate taxpayers: 18%

   2. Higher/additional‑rate taxpayers: 24% Important: If a gain takes you from the basic‑rate band into the higher‑rate band, you may pay 18% on the portion within the basic band and 24% on the remainder.

How to calculate your capital gain — step by step

1. Sale price: Start with the amount you received on disposal.

2. Subtract allowable selling costs: estate agent fees, solicitor/conveyancing fees and any other costs directly attributable to the sale.

3. Subtract costs of acquisition: the original purchase price and associated purchase costs (e.g., Stamp Duty).

4. Subtract allowable enhancement costs: capital improvement expenses that add value (e.g., an extension). Routine maintenance and decorating are not allowable.

5. Result: this is your total gain.

6. Apply losses: deduct any allowable losses carried forward or those realised in the same year.

7. Subtract the Annual Exempt Amount (£3,000).

8. Apply the relevant CGT rate(s) — 18% or 24% as determined by your total taxable income.

Practical tip: If you have investment losses from other asset disposals, report them to HMRC so they can be offset against gains and reduce your CGT liability.

Special rules and timing

• Reporting deadlines:

  • Most assets: report and pay CGT through Self Assessment by 31 January following the end of the tax year.

  • UK residential property (non‑main home): report and pay any CGT due within 60 days of completion via HMRC’s “Capital Gains Tax on UK property” service.

• Reliefs: Certain reliefs can reduce CGT (e.g., Private Residence Relief for your main home, Business Asset Disposal Relief for qualifying business disposals). Relief eligibility depends on specific conditions and should be checked with a tax adviser.

Why professional planning matters — and how QuantumREI helps The interaction between CGT, Income Tax bands, allowances and reliefs can be complex — especially for cross‑border investors. Changes such as the 60‑day reporting rule and the harmonised rates make timely and accurate planning essential.

At QuantumREI we provide more than acquisition support.

We offer tax‑aware investment planning:

• Strategic acquisition and disposal timing to manage tax bands.

• Coordination with specialist mortgage brokers and management teams to optimise cashflow and tax position.

• End‑to‑end support: sourcing, underwriting, legal coordination and asset management so your investment is managed in a tax‑efficient, compliant way.

Common CGT FAQs

1. Q: What is the CGT allowance for 2025/26?

   1. A: The Annual Exempt Amount for 2025/26 is £3,000 for individuals and £1,500 for trusts.

2. Q: Do I pay CGT when I sell my main home?

   1. A: Usually no. Private Residence Relief typically exempts the sale of your main home from CGT. Exceptions exist if the property has been let out, used for business, or includes large grounds (over 5,000 sqm), in which case some CGT may be payable.

3. Q: When must CGT be paid?

   1. A: - For most disposals, report via Self Assessment and pay by 31 January after the tax year end.

   2. For UK residential properties (not your main home), report and pay within 60 days of completion.

4. Q: Are long‑term holdings taxed at a lower rate?

   1. A: No. The UK does not provide lower CGT rates solely for long‑term ownership. Certain specific reliefs — for qualifying business disposals (Business Asset Disposal Relief) — can reduce the rate for eligible entrepreneurs, but ordinary long‑term holdings do not attract a reduced CGT rate.

Final thoughts Capital Gains Tax is a pivotal element of investment planning. For property investors, efficient CGT management — through timing, reliefs, allowable deductions and careful reporting — can materially improve your realised returns. With changes to reporting deadlines and rates now firmly in place for 2025/26, professional advice and meticulous record‑keeping are more important than ever.