Capital Gains Tax is a UK tax that may apply when you dispose of an asset for more than it cost, after deducting allowable costs, losses, reliefs and the annual exempt amount.
Capital Gains Tax in plain English
Capital Gains Tax, often shortened to CGT, is tax on the profit you make when an asset has gone up in value and you sell it, give it away, transfer it or otherwise dispose of it.
The tax is on the gain, not the full sale price. If you bought an investment for £10,000 and later sold it for £15,000, the starting gain would be £5,000 before deducting allowable costs, losses, reliefs or allowances.
CGT often matters for investments held outside an ISA or pension, second properties, valuable personal possessions and some business assets. It usually does not apply to gains inside an ISA, and your main home is often covered by Private Residence Relief if it has been your only or main residence throughout ownership.
For the 2026/27 tax year, individuals have a £3,000 annual exempt amount. This means only taxable gains above that allowance may be charged to CGT, after taking account of eligible losses and reliefs.
From 6 April 2026, gains that fall within the basic-rate band are charged at 18%, while gains above the basic-rate band are charged at 24%. Your total taxable income can affect which rate applies.
Calculate Capital Gains Tax
Use the Capital Gains Tax calculator to estimate taxable gains, apply the annual exempt amount and understand how rates may affect the amount due.
Capital Gains Tax Calculator
Estimate CGT on shares, funds, property or other taxable gains.
Capital Gains Tax allowance and rates
The annual exempt amount is the tax-free allowance for capital gains in the tax year. Rates then depend on your income band and the taxable gain.
| Item | 2026/27 figure | What it means |
|---|---|---|
| Annual exempt amount | £3,000 | Amount of gains an individual can generally realise before CGT is due. |
| Lower main rate from 6 April 2026 | 18% | Applies to gains that fall within the basic Income Tax band. |
| Higher main rate from 6 April 2026 | 24% | Applies to gains above the basic Income Tax band. |
Note: special rules can apply to business reliefs, carried interest, trusts, non-residents and other situations. This page is a plain-English glossary overview, not tax advice.
Example of a taxable gain
Suppose you bought shares outside an ISA for £8,000 and sold them for £14,000. Your starting gain is £6,000.
If no losses or reliefs apply, you would deduct the £3,000 annual exempt amount for 2026/27, leaving £3,000 of taxable gain.
The CGT rate applied to that taxable gain depends on your income and whether the gain falls within or above the basic-rate band.
Capital Gains Tax and ISAs
One of the main benefits of a Stocks and Shares ISA is that gains inside the ISA are normally sheltered from Capital Gains Tax.
This can be valuable for long-term investors because gains can build over many years without needing to use the CGT annual exempt amount when investments are sold inside the ISA.
ISA Calculator
Estimate ISA contributions, growth and remaining annual allowance.
Losses and record keeping
Capital losses can sometimes be used to reduce taxable gains. If you sell an asset for less than it cost, the loss may be deductible against other gains, subject to reporting rules and time limits.
Good records are important. Keep purchase prices, sale proceeds, transaction costs, dates, dividend reinvestment records, fund equalisation details and any losses you intend to claim.
If you use a general investment account, your platform may provide helpful tax reports, but you remain responsible for checking whether the figures are complete and suitable for your tax return.
Common Capital Gains Tax mistakes
- Thinking tax applies to the full sale price: CGT is based on the gain, not the total proceeds.
- Forgetting the annual exempt amount: only gains above the allowance may be taxable.
- Ignoring losses: allowable losses may reduce taxable gains if recorded properly.
- Selling outside an ISA without checking the tax impact: a large gain can create an unexpected bill.
- Assuming all property gains are exempt: second homes and rental properties can create CGT issues.
- Poor record keeping: missing purchase records can make gain calculations harder.