Capital gains tax in 2026: what the new rates mean for you
The rates changed on 6 April 2026 and the annual exempt amount is now just £3,000. If you’re planning to sell a business, a property, or an investment, the numbers are different to what you might remember — and the gap between acting with a plan and acting without one is wider than ever.
Capital gains tax doesn’t tend to be something people think about day-to-day — until it suddenly is. You’re selling a rental property, exiting a business, or disposing of a significant investment, and then someone mentions CGT and the numbers start to feel very real.
The April 2026 changes shifted things meaningfully. The annual exempt amount has been cut to £3,000, and the rates themselves have been restructured. For a lot of our clients — property investors, business owners, and contractors with shareholdings — this makes planning more important, not less.
This post sets out the current position in plain English: what capital gains tax now costs, what reliefs are still available, and how we tend to approach CGT planning with clients who have something to sell.
The 2026-27 rates at a glance
From 6 April 2026, the capital gains tax rates that apply depend on where your income sits relative to the basic rate band.
- Basic rate taxpayers pay 18% on gains that fall within the basic rate band, and 24% on any gains above it.
- Higher and additional rate taxpayers pay 24% across all their gains.
- Trustees and personal representatives also pay 24%.
The annual exempt amount — the slice of gains you can make each tax year before any CGT is due — is £3,000 for 2026-27. That’s a significant reduction from where it stood just a few years ago, and it catches more people than before.
One thing worth understanding: your gains are added on top of your income when working out which rate applies. So if you’re a basic rate taxpayer but a large gain pushes you into the higher rate band, part of that gain will be taxed at 18% and the rest at 24%. The maths matters, and it’s worth modelling before you commit to a disposal.
For context, HMRC collected £13.3 billion in CGT receipts in 2024-25 — up substantially over recent years. The government is watching this closely, and the IFS has publicly argued the current system still creates distortions. Further change is possible.
Business Asset Disposal Relief: what’s changed
Business Asset Disposal Relief (BADR) — previously known as Entrepreneurs’ Relief — remains available for qualifying business disposals, but the rate changed on 6 April 2026. It now sits at 18%, up from the 10% rate that applied in earlier years.
BADR can still be worth claiming. If you’re selling a trading company or your interest in a trading partnership and you meet the qualifying conditions, 18% is considerably better than 24%. The lifetime limit of £1 million of qualifying gains remains in place.
Who qualifies?
Broadly, you need to have held at least 5% of the ordinary shares and voting rights in a trading company (or the holding company of a trading group) for at least two years before the disposal. The rules have specific nuances — particularly around what counts as a trading company versus an investment company — so this is an area where we’d always recommend getting proper advice before assuming you qualify.
If you’re a contractor or consultant holding shares in your own limited company, BADR may be relevant when you come to close the company down or sell it. It’s one of the more valuable reliefs still available to owner-managed businesses, even at the revised rate.
The gap between making a disposal with a plan and making one without has widened considerably since April 2026. A £3,000 exemption doesn’t go far — the planning has to do the heavy lifting.
Capital gains on property: a particular pressure point
Property is where capital gains tax bites hardest for most of our clients. In 2024-25, 163,000 taxpayers filed a CGT return specifically for UK property gains, reporting £10.3 billion between them. That’s a significant number of people navigating a process that many find confusing.
A few things to keep in mind if you’re selling a rental property or second home:
- The 60-day reporting rule applies. If you’re a UK resident selling residential property with a CGT liability, you must report and pay any CGT owed within 60 days of completion. Missing this deadline means automatic penalties, and HMRC does enforce it.
- Principal private residence (PPR) relief may reduce or eliminate your liability if the property was your main home at some point. The rules around periods of absence and final-period exemption are worth understanding carefully.
- Letting relief is now much more restricted than it was — it only applies where you shared the property with your tenant, which rules most landlords out.
For landlords with growing portfolios, the cumulative CGT exposure on multiple properties can be substantial. We work with clients on structuring disposals across tax years and making proper use of the annual exempt amount to reduce the overall bill where possible.
The risks of doing nothing — HMRC’s reach is long
One thing we see with CGT more than almost any other tax area: people assume that because the transaction happened a few years ago, HMRC won’t notice. That’s rarely a safe assumption.
HMRC can raise an assessment for undeclared capital gains going back six years where the error is deemed careless. If they consider the non-disclosure deliberate, that window extends to 20 years. Property transactions in particular leave a clear paper trail — Land Registry records are publicly accessible and HMRC uses them systematically.
If you’ve had a disposal in a previous year that wasn’t reported correctly — whether because you didn’t realise it was taxable, or because you thought the gain fell under the exempt amount when it didn’t — it’s nearly always better to come forward proactively than to wait. HMRC’s approach to voluntary disclosures is generally more favourable than to cases they discover themselves.
We help clients regularise their position where needed, and we can liaise with HMRC on your behalf. The process is far less painful than people expect when it’s handled properly from the start.
Our take
Capital gains tax is not going away, and with a £3,000 annual exempt amount and rates up to 24%, the cost of an unplanned disposal is higher than it’s been in a long time. That doesn’t mean you should avoid selling — sometimes the right move financially is still to sell, even with a CGT bill attached. But you should go into it with your eyes open about the numbers.
Where we add real value is in the planning stage: working out the most tax-efficient way to structure a disposal, whether BADR applies, how gains interact with your income, and whether spreading across tax years makes sense. If you’re considering a significant sale — a business, a property, or a shareholding — this is exactly the kind of conversation worth having before you exchange contracts, not after.
Common questions about capital gains tax
What is the capital gains tax annual exempt amount for 2026-27?
For the 2026 to 2027 tax year, the annual exempt amount is £3,000. This is the portion of your gains each year that is free from CGT. Any gains above this threshold are subject to tax at the applicable rate depending on your income and the type of asset.
Do I pay capital gains tax when I sell my main home?
Usually not. Your main residence is typically covered by Principal Private Residence relief, which exempts the gain on a property that has been your only or main home throughout your period of ownership. If you’ve let the property out or used part of it for business, the position is more complex and worth reviewing with an accountant.
How long do I have to report a property capital gain to HMRC?
If you’re a UK resident and have sold residential property with a CGT liability, you must report the gain and pay the tax within 60 days of the completion date. Missing this deadline triggers automatic penalties. The 60-day window applies even if you later submit a Self Assessment return covering the same year.
Is Business Asset Disposal Relief still worth claiming in 2026?
Yes, in most cases. The rate is now 18% — higher than before, but still well below the standard 24% rate for higher-rate taxpayers. If you’re selling a qualifying trading business or company shares and meet the conditions, BADR can still represent a significant saving on gains up to the £1 million lifetime limit.
What happens if I forgot to report a capital gain in a previous year?
HMRC can go back six years for careless errors, and 20 years where non-disclosure is considered deliberate. It is generally better to disclose voluntarily than to wait for HMRC to contact you. A proactive disclosure typically results in lower penalties. We can help you assess your position and manage the process.