What triggers CGT (and what does not)
| CGT applies when you DISPOSE of a chargeable asset that has gone up in value. Disposal includes | Chargeable assets (CGT applies) | Exempt from CGT |
|---|---|---|
| Selling for cash | Stocks/shares (outside ISA/SIPP) | ISA balance (Cash, Stocks, LISA, IFISA) |
| Gifting (deemed disposal at market value, unless to spouse/civil partner or charity) | Mutual funds / OEICs / unit trusts (outside ISA/SIPP) | SIPP / pension balance |
| Exchanging for another asset | Crypto/digital assets | Main residence (Private Residence Relief) |
| Receiving compensation (insurance, court award) | Second home, holiday home, buy-to-let property | Personal possessions under GBP 6,000 |
| Losing/destroying the asset | Business shares (with Business Asset Disposal Relief if eligible) | Gifts to spouse/civil partner |
| Personal possessions over GBP 6,000 (jewelry, antiques, art) | Gifts to UK charity | |
| Crypto-collectibles, NFTs | Premium Bonds, NS&I products | |
| UK government gilts (yes, gilts have unique status - direct holdings exempt from CGT) | ||
| Foreign currency for personal use |
Key concept: "Bed and ISA" strategy. Sell taxable shares in your General Investment Account (triggering CGT at AEA), immediately rebuy inside ISA. Future growth is now tax-free. Repeat over multiple tax years to migrate entire portfolio into ISA.
2026 rates and Annual Exempt Amount
| 2025-26 tax year | 2026 rates (from October 30, 2024 Budget) | Residential property gains (after applying any Private Residence Relief) | Business Asset Disposal Relief (BADR) | Carried interest (private equity / hedge fund) |
|---|---|---|---|---|
| AEA: GBP 3,000 (reduced from GBP 6,000 in 2024-25, from GBP 12,300 in 2022-23) | Basic rate (income within GBP 12,571 - GBP 50,270 band): 18% on most gains | Basic rate: 18% | 10% rate (rises to 14% from April 2025, 18% from April 2026) | 28% (effective from 2025-26, was 32%) |
| Married couples: GBP 6,000 (each spouse has own AEA) | Higher rate (income above GBP 50,270): 24% | Higher rate: 24% (reduced from 28% in April 2024) | GBP 1M lifetime cap | Reform proposed to abolish "carried interest" treatment from 2026, taxing as ordinary income |
| Trusts: GBP 1,500 (half of individual) | Must hold 5% of shares + voting rights + 2 years of trading | |||
| Personal Representatives (estates): GBP 3,000 for tax year of death + next 2 tax years |
Worked example - basic-rate taxpayer:
Maria, salary GBP 30,000. Sold ETF in 2025-26: GBP 15,000 gain.
- Less AEA GBP 3,000: GBP 12,000 taxable gain
- Basic-rate band income remaining: GBP 50,270 - GBP 30,000 = GBP 20,270 (gain fits within basic band)
- CGT: GBP 12,000 * 18% = GBP 2,160
Worked example - higher-rate taxpayer:
David, salary GBP 80,000. Sold rental property: GBP 50,000 gain.
- Less AEA GBP 3,000: GBP 47,000 taxable
- Income already at higher rate, so all GBP 47,000 at 24%
- CGT: GBP 11,280
- Plus 60-day reporting required for residential property
| Asset type | Basic rate | Higher rate | AEA threshold |
|---|---|---|---|
| Shares / crypto | 18% | 24% | GBP 3,000 |
| Residential property | 18% | 24% | GBP 3,000 |
| Business shares (BADR) | 14% (rising) | 14% (rising) | GBP 1M lifetime |
| Direct UK gilts | CGT EXEMPT | CGT EXEMPT | N/A |
| Inside ISA / SIPP | 0% always | 0% always | N/A |
Shares + crypto: matching rules
When you sell shares of the same company at different times and prices, HMRC uses Section 104 Pool rules to calculate the gain:
- Same-day rule: if you sell and rebuy the same security on the SAME DAY, the cost basis matches up first.
- 30-day rule (bed and breakfasting prevention): if you sell and rebuy within 30 days, the cost matches the rebuy (you cannot use this to crystallize a loss).
- Section 104 Pool: all other shares form an averaged pool. Cost per share = total cost / total shares. Disposal proceeds - pooled cost = gain.
Worked example - share pool:
April 2022: bought 100 shares of TSCO at GBP 250
January 2024: bought 100 shares of TSCO at GBP 300
December 2025: sold 50 shares of TSCO at GBP 400
Pool cost: (100 * 250 + 100 * 300) / 200 = GBP 275 average per share
50 shares sold: cost GBP 50 * 275 = GBP 13,750
Proceeds: 50 * 400 = GBP 20,000
Gain: GBP 6,250
Less AEA GBP 3,000: GBP 3,250 taxable
At 18% basic rate: GBP 585 CGT
Crypto follows the SAME share-pooling rules. Bitcoin/Ethereum/altcoins treated as a single pool per coin. Sales are matched against the pool.
Wash trades: HMRC and crypto: you cannot "harvest losses" by selling at a loss and immediately rebuying (30-day rule). Most platforms (Binance, Coinbase) provide tax reports showing pool calculations.
Foreign currency: only chargeable if more than GBP 6,000 in any single asset transaction. Personal travel/spending: exempt.
Gifts to spouse: deemed disposal at original cost (no CGT for giver). Spouse inherits original cost basis. Useful for using both AEAs.
Residential property: 60-day reporting
| UK residential property gains have a SHORTER reporting deadline than other CGT | Main residence (Private Residence Relief - PRR) |
|---|---|
| 60 days from completion date | 100% PRR if you lived there throughout ownership |
| File on gov.uk dedicated CGT property return (separate from Self Assessment) | Partial PRR if you lived part-time (e.g. rented out portions of years) |
| Pay tax owed by same deadline (60 days) | "Final 9 months" rule: last 9 months of ownership always counted as residence even if you moved out |
| Late filing penalty: GBP 100 flat, plus daily charges | Letting Relief: capped at GBP 40,000 (only available if you shared the home with the tenant) |
Worked example - rental property sale:
Liam bought GBP 250K rental in 2015. Sold for GBP 400K in 2025.
- Gain: GBP 150,000 (less allowable costs like agent fees, improvements)
- Allowable costs: GBP 10K stamp duty + GBP 8K legal/agent + GBP 25K extension
- Net gain: GBP 150K - GBP 43K = GBP 107,000
- Less AEA GBP 3,000: GBP 104,000
- At 24% higher rate: GBP 24,960 CGT
- Reporting: 60-day return + payment
Non-UK residents: same 60-day rule. NRCGT (Non-Resident Capital Gains Tax) applies to UK residential property gains regardless of where the seller lives.
Inherited property: cost basis is market value at date of death (NOT what the deceased paid). This step-up wipes out lifetime accumulated gain.
Common CGT mistakes
- Forgetting the GBP 3,000 AEA each tax year. Many sell large amounts in one year and waste prior years allowance.
- Not using spouse AEA. Married couples can use GBP 6,000 combined per year. Plan disposals.
- Missing the 60-day residential property reporting deadline. Penalty + interest from day 61.
- Forgetting allowable costs. Solicitor fees, estate agent fees, structural improvements all reduce gain.
- Confusing tax year with calendar year. UK tax year: April 6 - April 5.
- Not knowing about gilts CGT exemption. Direct UK gilts have no CGT - useful for high-net-worth bond holders.
- Skipping bed-and-ISA strategy. Big taxable portfolio left in General Investment Account; could be migrated to ISA over 2-3 years.
- Selling within 30 days of buying same security (bed and breakfast rule). Pool cost matches purchase, not historical pool. Plan timing.
- Treating crypto gains as somehow special. Same rules as shares, same pool method.
- Not reclaiming losses. Capital losses can offset gains in same year, then carry forward indefinitely. Claim via Self Assessment within 4 years of the loss.
Run the math for your situation
Use our GB calculator to plug in your own numbers.