How to Make the Most of the CGT Annual Exempt Amount in 2026/27

The Capital Gains Tax Annual Exempt Amount (AEA) has been cut dramatically over the past three years. In 2022/23 it stood at £12,300. It was halved to £6,000 in 2023/24 and then halved again to £3,000 from 2024/25 -- a level that is now permanent for 2026/27.

For investors, this reduction means far more gains are taxable than three years ago. But the AEA still represents a genuine opportunity for those who plan disposals carefully. With a couple both using their allowance, £6,000 of gains are still sheltered each year. Used well over a decade, that is £60,000 of gains on which no tax is paid.

This guide explains the AEA rules for 2026/27 and the main strategies for using it efficiently.

What the AEA Is and Is Not

The AEA of £3,000 is applied to your net chargeable gains in a tax year. Net means after deducting any allowable capital losses -- both losses realised in the current year and losses brought forward from previous years.

Key rules:

• You cannot carry the AEA forward to a future year -- unused AEA is lost
• You cannot transfer your AEA to a spouse (but both partners get their own AEA)
• Capital losses must be used in the year they arise before the AEA applies, not after -- this can waste losses against gains that would have been covered by the AEA anyway
• The AEA applies per individual, not per asset class -- all your gains across shares, crypto, property (except main home) and other assets are pooled

CGT Rates in 2026/27

From October 2024, the government unified CGT rates across most asset classes:

Note that residential property CGT was previously higher (18%/28%), but the rates were aligned at 18%/24% from October 2024. Business Asset Disposal Relief remains at 10% for qualifying business sales, up to a £1,000,000 lifetime limit.

Your rate is determined by stacking gains on top of income. If you are a basic rate taxpayer and gains push your total over £50,270, the gains above that threshold are taxed at 24%.

Strategy 1: Bed-and-ISA -- Move Gains Into the Tax-Free Wrapper

The most powerful CGT strategy for investors with taxable shares or fund holdings is bed-and-ISA:

1. Sell shares or funds held in a taxable account, crystallising gains up to the £3,000 AEA
2. Immediately purchase the same shares or funds inside a Stocks and Shares ISA using the proceeds and your annual ISA allowance (£20,000 in 2026/27)

Inside the ISA, future gains and dividends are permanently sheltered from tax. The 30-day matching rules do not apply to repurchases inside an ISA -- you can sell on Monday and buy the same fund in your ISA on Tuesday without triggering the anti-avoidance rules.

Example over 5 years:

A portfolio of index funds worth £100,000 with an embedded gain of £50,000 cannot be moved to an ISA in one tax year without significant CGT. By selling £X each year to realise £3,000 of gains and reinvesting in the ISA, you gradually shift the portfolio. Over 5 to 10 years, using both partners' AEAs and ISA allowances, a substantial portfolio can be restructured into a completely CGT-free environment.

Strategy 2: Spouse and Civil Partner Transfers

CGT transfers between spouses and civil partners take place at no gain/no loss. This means:

• You transfer an asset to your spouse at your original cost base (not market value)
• Your spouse takes ownership with no immediate CGT event
• When your spouse sells, they use their own AEA (£3,000) and their own marginal rate

This is most useful when one partner is a basic rate taxpayer (18% CGT) and the other is a higher rate taxpayer (24% CGT). By transferring assets to the lower-rate spouse before disposal, you save 6 percentage points on the CGT rate -- plus both get the £3,000 AEA.

For a gain of £20,000 split equally between two basic rate spouses after both AEAs: £14,000 x 18% = £2,520. The same gain in a single higher rate individual's hands: £17,000 x 24% = £4,080.

Strategy 3: Timing Disposals Across Tax Years

Because the AEA resets each 6 April, spreading disposals across two tax years doubles the exemption available.

Example: You want to sell shares with a gain of £6,000. If you sell all in March 2027, you use one year's AEA (£3,000 chargeable, taxable). If you sell half in March 2027 and half in April 2027 (the new tax year), you use the AEA twice, potentially sheltering the full gain.

This requires patience and carries market risk -- prices may move between the two disposal dates -- but is a legitimate and entirely straightforward tax planning step.

Strategy 4: Cryptocurrency and the AEA

Cryptocurrency is treated as a capital asset. Each of the following is a taxable disposal:

• Selling crypto for sterling or other fiat currency
• Swapping one cryptocurrency for another
• Using crypto to pay for goods or services

The AEA applies across all your gains including crypto. If your only taxable gain in 2026/27 is £2,500 from selling Bitcoin, no CGT is due (within the £3,000 AEA).

The 30-day matching rules also apply to crypto: if you sell and repurchase the same coin within 30 days, the gain is not crystallised. Record-keeping is essential -- you need the cost basis for every transaction. HMRC receives data from UK-regulated crypto exchanges and cross-references this against tax returns.

Partial Disposals: Control Your Annual Gain

For assets with large embedded gains, partial disposal allows you to control how much gain you realise each year, making maximum use of each year's AEA.

HMRC requires you to calculate the cost basis of a partial disposal proportionately. For shares, the pooling rules apply: your average cost across all purchases is used for each disposal.

Practical application: A fund worth £60,000, bought for £40,000 (gain £20,000). Selling one fifth each year realises £4,000 of gain per year. After the £3,000 AEA, only £1,000 is chargeable per year. Over 5 years, you have exited the position paying CGT on only £5,000 of the £20,000 gain -- saving around £2,400 in CGT for a higher rate taxpayer compared with an immediate disposal.

Reporting: When You Must Tell HMRC

You must report capital gains to HMRC via Self Assessment if:

• Your chargeable gains (after the AEA) are positive
• Your total disposal proceeds exceed £12,000 (four times the AEA)
• You disposed of UK residential property (always report within 60 days)

Even if your gains are within the AEA, report if your total disposal proceeds exceed £12,000. HMRC receives data from platforms and will match this against records.

The 60-day reporting rule for UK residential property applies even when the gain is within the AEA and no tax is due. Use the HMRC CGT on UK Property account to file.

Using Losses Wisely

Capital losses must be reported to HMRC -- they do not arise automatically. Losses realised in the current year are deducted from gains before the AEA is applied, which can waste the AEA if the net gain after losses is below £3,000.

Losses brought forward from previous years are only used to reduce gains to the AEA level -- you do not have to use carried-forward losses if doing so would simply eliminate gains that would already be covered by the AEA.

This distinction is important: always use current-year losses first (mandatory), but manage carried-forward losses carefully to preserve the AEA.

Use our CGT calculator at calchub.uk to model your disposal scenarios with 2026/27 rates and both spouses' allowances.