Capital Gains Tax Planning for UK Taxpayers in 2026

Capital Gains Tax (CGT) has undergone significant rate changes in recent years, and the planning landscape has shifted accordingly. The abolition of the higher CGT annual exemption (reduced from £12,300 in 2022/23 to £6,000 in 2023/24 and then £3,000 from 2024/25 onwards) has brought many more investors into the CGT net for the first time. Understanding the current rates, reliefs, and practical techniques to manage CGT liability is increasingly important for anyone with investment assets, property, or a business.

Current CGT Rates (2026/27)

CGT rates in the UK are tiered by taxpayer status. Since the October 2024 Budget, the rates on all assets — residential property, shares, funds, commercial property, crypto, and business assets — have been equalised:

All assets (residential property, shares, funds, commercial property, business assets, crypto):

• 18% (basic-rate taxpayer)
• 24% (higher or additional-rate taxpayer)

The basic-rate or higher-rate distinction depends on the individual's total taxable income plus the gain: gains that fall within the basic-rate income tax band (up to £50,270 for 2026/27) are taxed at the lower rate; gains above this threshold are taxed at the higher rate.

Business Asset Disposal Relief (BADR) — formerly Entrepreneurs' Relief — applies a reduced 18% rate to qualifying gains on the disposal of a business or business assets, subject to a lifetime limit of £1 million. The rate rose from 10% to 14% in April 2025 and increased again to 18% in April 2026, where it now stands.

The £3,000 Annual Exempt Amount

The annual exempt amount (AEA) is now £3,000 per individual for 2024/25 onwards (down from £12,300 in 2022/23). This means gains of up to £3,000 each tax year are free from CGT — substantially lower than in recent years.

For a married couple or civil partnership, both partners are entitled to their own AEA of £3,000, providing £6,000 of joint CGT-free gains per year. The AEA cannot be carried forward; unused allowance in one year does not roll over to the next.

Practical implication: portfolios that were previously managed with the assumption of a large annual exemption need to be reviewed. Gains that were routinely realised each year to use the exemption now generate smaller benefits.

Using the Spousal Exemption

Transfers between spouses or civil partners who are living together are exempt from CGT on an inter-spousal basis — the asset is treated as transferred at the original acquisition cost (no gain, no loss). This creates important planning opportunities:

Rate equalisation: A higher-rate taxpaying spouse has a 24% CGT rate; a basic-rate spouse has an 18% rate (the rates are the same for all asset types since October 2024). Transferring an asset to the lower-rate spouse before disposal reduces the tax rate by 25% on that gain.

AEA doubling: If only one partner realises gains regularly, transferring a portion of assets to the other partner enables use of both annual exemptions.

Residential property timing: For properties with large embedded gains, a transfer to a lower-rate or non-taxpaying spouse can reduce the rate from 24% to 18% — a 25% reduction in the tax rate.

Practical points:

• The transfer must be genuine — the spouse must become the beneficial owner, not merely a nominee.
• HMRC is alert to arrangements where assets are transferred to a spouse immediately before a pre-arranged sale purely to access a lower rate. Genuine ownership must precede any arranged disposal.
• Consider the IHT implications of concentrating all assets in one spouse's name.

Bed-and-ISA: Using the Annual Exemption Efficiently

The "bed-and-ISA" technique involves selling shares or fund units from a general investment account (GIA) and repurchasing them immediately within an ISA. The mechanism:

1. Sell the investment — realising a capital gain (if the asset has grown) or a loss (if it has fallen).
2. Immediately purchase the same investment inside a Stocks and Shares ISA using the proceeds.

Effect: The asset is now inside the ISA wrapper. Future growth is free from CGT and income tax. The gain (or loss) realised on the sale is recorded for CGT purposes in the tax year of sale.

Gains of up to £3,000 can be realised in this way each year without triggering a CGT liability (or more, if there are losses to offset or unused basic-rate band).

Note: the CGT "30-day rule" (the share-matching rule that prevents simple "bed-and-breakfasting" by selling and immediately rebuying the same shares in your own name) does not catch a repurchase made inside an ISA, because the shares within the ISA are a different holding for CGT purposes — so you can sell from a GIA and rebuy in an ISA immediately without the rule applying.

Utilising Capital Losses

Capital losses — realised when an asset is sold for less than its acquisition cost — can be offset against capital gains in the same or future tax years. Losses must be reported to HMRC (even if no tax is due) to be banked for future use.

Loss harvesting: Deliberately realising losses in a year with significant gains can offset the tax. This requires selling loss-making positions, which some investors are reluctant to do for behavioural reasons.

Losses and the AEA: Losses reduce your net gain before the AEA is applied. If losses already reduce gains below £3,000, the AEA has no additional value in that year. However, losses can be carried forward indefinitely, so they retain value for future years.

Business Asset Disposal Relief: Planning Points

BADR reduces CGT to 18% (the current rate from April 2026; it was 14% in 2025/26 and 10% before April 2025) on up to £1 million of qualifying gains over a lifetime. Qualifying disposals include:

• Disposal of all or part of a trading business run by the individual;
• Disposal of shares in a qualifying personal trading company (broadly, a company where the individual holds at least 5% of shares and votes, and is an officer or employee);
• Disposal of assets used in a qualifying business on cessation.

Two-year holding requirement: BADR requires that the qualifying conditions have been met for at least two years before disposal. Planning a business exit should start two years in advance, not two months.

Current rate position: The BADR rate increased to 18% from 6 April 2026 (up from 14% in 2025/26). Entrepreneurs planning exits should note that at 18%, BADR now offers a more modest saving versus the standard 18%/24% CGT rates, though the 18% flat rate remains advantageous for higher-rate taxpayers with qualifying gains.

The 60-Day Payment Window for Property

Since 27 October 2021, UK residents who realise a gain on the disposal of residential property must file a "CGT on UK property" return and pay any tax due within 60 days of completion (previously 30 days). Non-residents have faced similar reporting requirements for UK property since 2015.

This is a common area of non-compliance: many clients are unaware of the 60-day obligation and believe they can simply include the property gain in their annual self-assessment return. The penalties for failure to file and pay within 60 days begin to accrue from day 61.

Key points:

• The 60-day window starts from the date of completion, not exchange;
• A CGT estimate must be made — at this point, the full-year income tax position may not be known, requiring provisional calculations;
• Any over-payment can be corrected in the self-assessment return; under-payment incurs interest and penalties.

CGT and Non-Residents

Non-UK residents are subject to CGT on:

• UK residential property: gains on direct or indirect disposal of UK residential property;
• UK commercial property (from April 2019): gains on commercial property or property-rich entities;
• UK businesses and business assets in certain circumstances.

Non-residents who hold UK property should be aware of the reporting obligations even where no tax is ultimately payable. The five-year rule — whereby a former UK resident who returns within five years of departure may find gains realised while non-resident become taxable — requires careful forward planning for anyone anticipating return to the UK.

How Global Investments Can Help

CGT planning is most effective when decisions are made well in advance of a disposal, not at the point of completion. Our team works with clients to review their CGT exposure across all asset classes, identify the most efficient disposal sequence and timing, model the interaction with income tax bands, and ensure reporting obligations are met — particularly the 60-day window for property. Contact us for a CGT review.