For most of the last decade, the Capital Gains Tax (CGT) annual exempt amount (AEA) was a comfortable buffer. At £12,300 it covered the bulk of small share disposals and let landlords and investors realise modest gains tax-free each year. That era is over.
The AEA was cut to £6,000 in April 2023, then halved again to £3,000 from April 2024. It has stayed there since. The number of CGT-paying individuals has roughly doubled as a result, and the question "do I have to pay CGT on this?" now almost always has the same answer: probably yes.
The new CGT rate landscape
Following the October 2024 Budget, the main CGT rates were aligned upwards. For disposals made on or after 30 October 2024:
- Basic rate taxpayers: 18% on most gains.
- Higher and additional rate taxpayers: 24% on most gains.
- Residential property: 18% / 24% (the previous 28% higher rate was reduced to 24% — but with the AEA cut, more sellers are still worse off overall).
- Carried interest: taxed at a flat 32% from April 2025, transitioning to the income tax regime from April 2026.
Business Asset Disposal Relief (BADR) — no longer a 10% relief
BADR (formerly Entrepreneurs' Relief) provides a reduced CGT rate on qualifying business disposals up to a £1m lifetime limit. The rate, historically 10%, has been increased on a phased basis:
- 10% for qualifying disposals before 6 April 2025.
- 14% for disposals between 6 April 2025 and 5 April 2026.
- 18% from 6 April 2026 onwards.
For founders considering a sale, the rate at the disposal date can swing the after-tax proceeds by tens of thousands of pounds. We model the difference between completing before and after the April rate change in every exit conversation. If you are mid-process, talk to our business advisory team about completion timing.
"Do I pay CGT on a second home?"
Yes — and you must report and pay within 60 days of completion if it is a UK residential property and the gain is not fully covered by reliefs. The 60-day CGT return is one of the most-missed obligations we encounter. Penalties stack quickly.
Principal Private Residence (PPR) relief still fully exempts gains on your main home, but the final-period exemption is now just nine months. Letting relief is restricted to landlords who shared occupancy with their tenant. Many landlords selling buy-to-lets after the section 24 era are seeing CGT bills they did not anticipate.
Strategies that still work in 2026
- Use the AEA each year — £3,000 is small, but if you have a large unrealised portfolio, harvesting £3,000 of gains annually compounds over time.
- Inter-spouse transfers — transfers between spouses or civil partners are no-gain/no-loss, allowing two AEAs (£6,000 combined) and use of the lower-earning partner's basic-rate band.
- Bed and ISA / Bed and SIPP — selling unwrapped holdings and repurchasing inside an ISA or pension wrapper crystallises a gain (use the AEA) and shelters future growth.
- EIS / SEIS deferral — EIS investments allow you to defer a gain by reinvesting; SEIS investments give a 50% CGT reinvestment relief.
- Loss harvesting — realising losses on poorly performing assets banks them against future gains. Claims must be made within four years.
The 60-day reporting trap for non-residents
Non-UK residents must report disposals of UK property — residential and commercial — within 60 days, even if no tax is due. Our Dubai office sees this catch out clients regularly when they sell a UK flat. Late filing penalties apply automatically.
Don't forget the income tax interaction
Your CGT rate depends on your income tax position in the same year. If you have unused basic-rate band, the first slice of gain is taxed at 18% rather than 24%. Pension contributions that reduce taxable income can pull more of your gain into the lower band — a planning technique that often pays for itself.
Get the timing right
With the AEA at £3,000, BADR climbing to 18%, and the 60-day reporting clock running on property sales, CGT now demands the same kind of advance planning that corporation tax has needed for years. Our tax planning service includes a pre-disposal review for every significant sale.
If you are planning to sell a business, an investment property, or a share portfolio in the next 12 months, book a CGT planning call before you list. The right structure agreed in advance can be worth more than a year of growth on the asset.