CGT rates and the allowance
The Autumn 2024 Budget consolidated and raised UK Capital Gains Tax rates:
rates (unchanged from 2024/25):
* Basic rate band: 18% on residential AND non-residential assets * Higher rate band: 24% on residential AND non-residential assets * Trusts and personal representatives: 24% * Carried interest: 32% (specialist rules)
Annual exempt amount:
* 2022/23: £12,300 * 2023/24: £6,000 * 2024/25: £3,000 * 2025/26: £3,000 * 2026/27: £3,000
The allowance is per person, so a married couple has £6,000 combined. Trusts get half: £1,500.
The math that hurts:
A higher-rate investor with £15,000 of stock gains in 2022/23 paid: (£15,000 - £12,300) × 20% = £540. The same investor in 2026/27 pays: (£15,000 - £3,000) × 24% = £2,880.
That is a 5.3x increase in CGT bill on the same gain. The rate change is part of the story; the allowance cut is the bigger driver.
What changed in Autumn 2024
Chancellor Rachel Reeves's October 2024 Budget brought several CGT changes:
1. Aligned non-residential CGT rates with residential
* Pre-budget: residential property 24% (higher rate), other assets 20% (higher rate) * Post-budget: both at 24% for higher rate * Effective: 30 October 2024 onwards
2. Increased basic rate
* Pre-budget: residential 18%, other 10% (basic rate) * Post-budget: both 18% * Effective from same date
3. Carried interest taxed at 32% (for private equity / hedge fund partners)
What did NOT change:
* Annual exempt amount (£3,000) * Residential property rates (already at 24%/18%) * CGT base cost rules * The 30-day matching rule for share disposals * Spousal transfer at no gain / no loss
What is on the radar for future budgets:
* Speculation about further alignment with income tax rates (highest income tax marginal is 47%, vs CGT 24%). Reeves has not committed. * Possible CGT rate harmonization across asset classes (share-class loopholes). * Whether the £3,000 allowance gets indexed (currently frozen with no end date announced).
| Asset type | Basic rate | Higher rate | Trust |
|---|---|---|---|
| Residential property | 18% | 24% | 24% |
| Other assets (shares, crypto) | 18% | 24% | 24% |
| Carried interest | 32% | 32% | 32% |
| Business asset disposal relief (under £1M) | 14% | 14% | n/a |
| Tax year | Allowance | Change |
|---|---|---|
| 2022/23 | £12,300 | - |
| 2023/24 | £6,000 | -51% |
| 2024/25 | £3,000 | -50% |
| 2025/26 | £3,000 | frozen |
| 2026/27 | £3,000 | frozen |
| Year | Allowance | Taxable gain | CGT |
|---|---|---|---|
| 2022/23 | £12,300 | £2,700 | £540 |
| 2023/24 | £6,000 | £9,000 | £1,800 |
| 2024/25 | £3,000 | £12,000 | £2,880 |
| 2026/27 | £3,000 | £12,000 | £2,880 (5.3x 2022/23) |
Wrappers that shield gains entirely
1. ISA (Individual Savings Account)
* £20,000 annual contribution limit (2026/27, unchanged for 9 years) * All gains, dividends, interest inside the ISA are CGT-free and income-tax-free * Withdrawals are tax-free at any age * Available types: Cash ISA, Stocks & Shares ISA, Innovative Finance ISA, Lifetime ISA (£4,000 sub-limit) * Junior ISA: separate £9,000 limit for under-18s
A married couple maxing both ISAs each year shelters £40,000/year of new contributions plus all future growth from CGT.
2. Pension (SIPP, workplace pension)
* All gains and dividends inside the wrapper are tax-free * On withdrawal: 25% tax-free, 75% taxed as income (not CGT) * Annual Allowance £60,000 (covered in the carry forward blog) * Best for long-term sheltering; less flexible than ISA
3. Spousal transfer
* Transfer assets to spouse at "no gain, no loss" before sale * Each spouse uses their £3,000 allowance * Combined £6,000 of tax-free gains per year * No CGT on the transfer itself
4. EIS / VCT
* 30% income tax relief on EIS investments + tax-free gains on sale (held 3+ years) * VCT (Venture Capital Trust): 30% income tax relief + tax-free dividends * Higher risk; suitable only for sophisticated investors with substantial portfolios.
5. SEIS (Seed EIS)
* 50% income tax relief on SEIS investments * Tax-free gains on sale * Very high risk (early-stage startup investments)
6. Roll-over relief
* Defer CGT on sale of qualifying business assets if you reinvest in replacement business assets within 3 years. * Specialist; consult an accountant for use.
Bed-and-ISA and other crystallisation strategies
Bed-and-ISA: sell shares held outside the ISA, immediately buy them back inside the ISA. This crystallises the gain (using your annual allowance) and transfers ownership to a tax-free wrapper for future growth.
Mechanics:
1. Sell shares in your taxable account (e.g., 100 shares of VWRL at £105 = £10,500). 2. Realise the gain (£10,500 - £8,500 cost basis = £2,000 gain). 3. Use £2,000 of your £3,000 allowance (no CGT due). 4. Buy 100 shares of VWRL in your ISA (using your £20,000 annual ISA allowance). 5. Future growth and dividends from these shares are tax-free forever.
30-day rule: if you sell and rebuy the SAME share class in the SAME account within 30 days, HMRC uses share-matching rules that may negate the crystallisation. But ISA is a separate "account" for matching purposes, so bed-and-ISA works without 30-day issues.
Bed-and-pension: same idea but you sell and re-buy via your SIPP. Works because the share inside SIPP is a different ownership entity. Better for younger investors who do not need access for decades.
Annual harvesting: use your £3,000 allowance every year, even if you do not need the cash. Crystallise £3,000 of gains, reinvest. Over a 30-year career this is £90,000 of gains permanently sheltered from future higher rates.
Spousal transfers before disposal: gift appreciated assets to your spouse, then both sell, using two £3,000 allowances. Especially useful when one spouse has unused allowance and other has significant gains.
Loss harvesting: sell losing positions before tax year-end. Losses offset gains in the same year, with excess carried forward indefinitely. Report losses on your self-assessment within 4 years to bank them.
When CGT actually matters: the £100K+ portfolio question
For most investors with sub-£100K portfolios, the £3,000 allowance + ISA + pension wrappers handle most situations without significant CGT exposure.
Where CGT bites:
1. Property investors: residential property cannot be held in ISAs/SIPPs. Capital gains on rental property are exposed to full 24% (or 18% basic rate). The combination with the Section 24 mortgage interest restriction has made many small landlords unprofitable.
2. Crypto investors: HMRC treats most crypto as capital assets. £3,000 allowance applies. Gains over that taxed at 24%/18%. Crypto cannot go in an ISA.
3. Company share sales: founder selling their own business above the £1M business asset disposal relief (BADR) cap pays full CGT. Note: BADR was reduced from £10M lifetime cap to £1M in 2020, and the rate raised from 10% to 14% in October 2024.
4. Vested employer stock outside RSU/EMI shelters: senior employees with material vesting events face CGT on each disposal above £3,000.
5. Inherited assets (eventually): while inheritance itself is exempt from CGT, future gains on the inherited asset are CGT exposed when you sell.
Planning checklist for £100K+ portfolios:
* Bed-and-ISA up to £20K/year of taxable holdings * Use spouse's allowance (£3,000 combined £6,000) * Realise £3,000 of gains every year, even if not needed * Bunch losses against gain years * Crystallise pre-Budget if you fear further rate hikes * Consider EIS for shelter on retained gains
Run the math for your situation
Use our 🇬🇧 United Kingdom calculator to plug in your own numbers.