💹
Dividend Allowance Cut to £500 — More Investors Paying Tax in 2026
5 min read
The Capital Gains Tax (CGT) annual exempt amount has been slashed from £12,300 (in 2022/23) to just £3,000 — a 76% reduction in three years. The impact is profound: millions of people who previously had gains below the threshold and owed nothing now face a CGT bill.
What Is CGT and Who Pays It?
CGT is charged on gains (profits) when you sell or dispose of certain assets: shares, property (not your main home), cryptocurrency, business assets, and more. You pay CGT on your gain, not the total sale proceeds.
The 2026 CGT Rates
| Asset Type | Basic Rate Taxpayer | Higher/Additional Rate Taxpayer |
|---|---|---|
| Shares and other assets | 18% | 24% |
| Residential property (not main home) | 18% | 24% |
| Business assets (BADR) | 10% | 10% |
The £3,000 Allowance in Practice
If you sold shares worth £20,000 that cost you £16,500, your gain is £3,500. Under the old £12,300 allowance, you'd pay zero CGT. Under the current £3,000 allowance, £500 is taxable. As a higher rate taxpayer, you'd owe £120 (24% × £500).
This seems small — but for investors with diversified portfolios or those who sell regularly, the cumulative impact of lower-allowance reporting obligations is significant.
How to Reduce CGT Legally
- Bed and ISA: Sell shares, take the £3,000 exempt gain, then repurchase the same shares inside an ISA. Future gains inside the ISA are tax-free.
- Bed and Spouse: Transfer assets to a spouse at no gain/no loss, then sell from their allowance.
- Spread disposal over tax years: Sell in tranches across multiple tax years to use multiple allowances.
- Capital losses: Offset current year capital gains with any capital losses from the same or previous years.
Frequently Asked Questions
Do I have to report CGT if my gain is under £3,000?
You still need to report disposals to HMRC if your total proceeds exceed £50,000 in the year (4 × the annual exempt amount) — even if the gain itself is under the threshold. This is done through Self Assessment or HMRC's real-time CGT reporting service.
What about selling crypto?
Cryptocurrency is treated as a capital asset by HMRC. Each disposal (sale, swap, or use to pay for goods) is a CGT event. With the £3,000 allowance, even modest crypto profits now trigger a tax bill for many investors.
Calculate your Capital Gains Tax with our CGT Calculator.