Glossary · UK
What is Annual Exempt Amount (CGT)?
The amount of net capital gains an individual can realise in a tax year without paying Capital Gains Tax, set at £3,000 for 2026/27.
Full Definition
The Annual Exempt Amount (AEA), sometimes called the CGT annual exemption, is a per-person allowance that shields a certain amount of net capital gains from Capital Gains Tax (CGT) each year. For 2026/27, the AEA stands at £3,000 -- a significant reduction from £12,300 in 2022/23 and £6,000 in 2023/24, reflecting the government's policy of gradually reducing the allowance to raise revenue. Every UK-resident individual receives a separate AEA, so married couples and civil partners each have their own £3,000 exemption, allowing up to £6,000 of combined gains to be sheltered annually if assets are shared appropriately before disposal. The AEA cannot be transferred between spouses or carried forward to a future tax year -- any unused exemption is simply lost. The AEA applies to net gains after deducting any allowable capital losses realised in the same tax year and any losses brought forward from previous years. Losses must be set against gains before the AEA is applied, which means losses reduce gains pound for pound first, then the AEA shelters whatever remains. This order of set-off can be disadvantageous when losses exceed the AEA, as the AEA may be wasted. For 2024/25 onwards, CGT rates on most assets are 18% (basic rate) and 24% (higher rate) for residential property disposals. For other assets including shares and most other investments, the rates are 18% (basic rate band available) and 24% (higher rate) following the October 2024 Autumn Budget changes. Business Asset Disposal Relief (formerly Entrepreneurs Relief) provides a reduced 14% rate for 2025/26 (rising to 18% in 2026/27) on qualifying disposals up to the £1 million lifetime limit. The AEA applies before any CGT is calculated at these rates.