Glossary · UK
What is Capital Gains Tax (CGT)?
Tax on the profit when you sell or dispose of an asset that has risen in value.
Full Definition
Capital Gains Tax (CGT) is charged on the gain (not the total proceeds) when you dispose of an asset such as shares, a second home, a business or valuable possessions. Each person has an Annual Exempt Amount of GBP 3,000 in 2026/27; only the gain above this, after deducting allowable losses, is taxable. For 2026/27 the rates are 18% for gains within the basic-rate band and 24% above it, for both residential property and other assets. Your main home is normally exempt under Private Residence Relief. Gains are reported through Self Assessment, or within 60 days for UK residential property.
How Capital Gains Tax (CGT) is calculated
Taxable gain = max(0, Gains - Losses - 3000)
CGT = Taxable gain x rate (18% basic band, 24% above)- 3000
- Annual Exempt Amount per person (GBP, 2026/27).
- 18% / 24%
- Basic-band rate then higher rate for 2026/27.
Worked example: A higher-rate taxpayer selling shares for a GBP 20,000 gain: (20,000 - 3,000) x 24% = GBP 4,080.