CGT allowance slashed to £3,000 — who is now paying capital gains tax and how to reduce your bill

Just a few years ago, you could make a gain of £12,300 on the sale of shares or property without paying any Capital Gains Tax. In 2025/26 and 2026/27, that tax-free allowance is just £3,000 — a 76% reduction. The Guardian reported in June 2026 that this is sweeping hundreds of thousands of additional taxpayers into CGT for the first time.

The CGT annual exemption — what changed and when

The reduction happened in two steps:

• 2022/23: Allowance was £12,300 (the original generous level)
• 2023/24: Cut to £6,000
• 2024/25 onwards: Cut again to £3,000 — where it remains for 2026/27

The allowance is per person, per tax year. Married couples and civil partners each have their own allowance, making the combined tax-free amount £6,000 if assets are held jointly or transferred between spouses before sale.

CGT rates in 2026/27

Since October 2024, the CGT rates for all assets (including shares and second properties) have been aligned:

• Basic-rate taxpayers: 18% on gains above the £3,000 exemption
• Higher and additional rate taxpayers: 24% on gains above the £3,000 exemption

Note: Your income tax rate for CGT purposes is determined by your total income plus the gain. If you are a basic-rate taxpayer but the gain takes your combined income above £50,270, the portion of the gain above £50,270 is taxed at 24%.

The 60-day residential property rule

If you sell a UK residential property that is not your main home (a buy-to-let, second home, or inherited property), you must report and pay any CGT within 60 days of the completion date. This is separate from and in addition to including the disposal on your annual Self Assessment return.

Failure to report within 60 days incurs automatic penalties: £100 after the deadline, rising to £300 (or 5% of the tax) after 6 months. HMRC is actively chasing late filers. Use our CGT calculator to estimate the tax immediately on exchange/completion.

Who is now paying CGT who wasn't before?

With the £3,000 exemption, a wide range of transactions now trigger CGT liability where previously they would not:

• Investors with small share portfolios: Selling £10,000 of shares bought at £5,000 produces a £5,000 gain — only £3,000 is exempt, leaving £2,000 taxable (£360 at 18%)
• ISA transfer mistakes: Shares held outside an ISA that have grown even modestly are now likely to trigger CGT on disposal
• Cryptocurrency: HMRC treats crypto as a capital asset — every disposal (sale, swap, or spending crypto) is a CGT event. With Bitcoin up significantly over recent years, even small portfolios can produce gains above £3,000
• Selling inherited assets: Probate value on death resets the CGT base cost, but subsequent growth before you sell is taxable

Legal strategies to reduce your CGT bill

1. Use your full annual exemption every year

The £3,000 exemption cannot be carried forward. If you do not use it this year, you lose it. Consider realising small gains annually to use your exemption, rather than letting gains accumulate and facing a large bill in one year.

2. Transfer assets to your spouse before sale

Transfers between spouses or civil partners are exempt from CGT. If your partner has unused CGT allowance or is a lower-rate taxpayer, transferring an asset to them before sale can reduce the overall CGT liability. Both partners get the £3,000 exemption, doubling the tax-free amount to £6,000 jointly.

3. Use ISAs and pensions

Gains within an ISA are completely exempt from CGT. Using the £20,000 annual ISA allowance to shelter investments means future gains will not be taxable. Similarly, gains within a pension are not subject to CGT. Moving investments into tax-sheltered wrappers should be a long-term priority.

4. Carry forward losses

Capital losses from selling assets at a loss can be offset against capital gains in the same or future years. There is no time limit on carrying losses forward. Ensure any losses are reported to HMRC (even if they result in no tax that year) so they are registered and can be used in future years.

5. Timing disposals across tax years

If you have a large gain to realise, splitting the disposal across two tax years (selling part before 5 April and the remainder after 6 April) effectively doubles your annual exemption and may keep more of the gain in the basic-rate band.

Frequently Asked Questions

I sold my family home — do I pay CGT?

Usually no. Your main residence is covered by Private Residence Relief (PRR), which exempts the gain on the sale of your main home entirely. PRR applies for all periods you lived in the property as your main home, plus the last 9 months of ownership even if you were not living there. Complications arise if you let the property, had multiple homes, or used part of it exclusively for business.

I made a loss on my shares — do I still need to report it?

You do not have to report a loss, but it is strongly advisable to do so. Reporting the loss registers it with HMRC so it can be offset against future gains. Losses not reported cannot be claimed retrospectively beyond the four-year limit. Report capital losses through your Self Assessment return.

Does the £3,000 exemption apply per asset or in total?

It applies to your total net gains across all assets in the tax year. If you sell shares at a £2,500 gain and a second property at a £5,000 gain in the same year, your total gains are £7,500. Subtract the £3,000 exemption to get taxable gains of £4,500.

What happens if I don't report a CGT disposal?

HMRC receives data from brokers, estate agents, and the Land Registry. They increasingly use this to identify undeclared disposals. Penalties for failing to report range from 30% to 100% of the tax owed (on top of the tax itself), depending on whether HMRC considers the failure deliberate. Always report CGT events through Self Assessment or the 60-day property reporting service on GOV.UK.

Does CGT apply to Premium Bond prizes or lottery winnings?

No. Premium Bond prizes, lottery winnings, and gambling winnings are exempt from both income tax and CGT. You can win £1 million on Premium Bonds and keep every penny tax-free.