Practise calculating CGT using the 2026/27 £3,000 annual exemption and 18%/24% rates on chargeable gains.
A basic-rate taxpayer (salary £28,000) makes a capital gain of £12,000 from selling shares. What is the CGT due in 2026/27?Annual exempt amount: £3,000. Rate: 18%.
Answers accepted within £5
Capital Gains Tax (CGT) is charged when you dispose of an asset and make a profit above the Annual Exempt Amount. It applies to shares, investment property, business assets, and certain personal possessions worth over £6,000. It does NOT apply to gains on your main residence (Principal Private Residence relief), ISA holdings, or UK gilts.
For 2026/27, the Annual Exempt Amount is £3,000 — the first £3,000 of net gains in the tax year is tax-free. Above this threshold, the CGT rate depends on whether you are a basic-rate or higher/additional-rate taxpayer: 18% for basic-rate taxpayers and 24% for higher or additional-rate taxpayers. From 6 April 2026 these rates apply to all assets, including shares — the previous lower rates for non-residential assets (10%/20%) were removed, aligning them with the residential property rates.
This drill generates gains on shares and asks you to subtract the Annual Exempt Amount and apply the correct rate based on the taxpayer's income band. All questions assume the taxpayer has no other capital gains in the year, and the gain does not push a basic-rate taxpayer into the higher-rate band (a simplification for practice purposes).
For gains that push a basic-rate taxpayer into the higher-rate Income Tax band, you would need to split the gain — taxing part at 18% and the rest at 24%. This more complex scenario is included in the calchub.uk CGT calculator but is beyond the scope of these beginner drills.
In practice, many investors manage CGT through annual "bed-and-ISA" transactions — selling assets up to the Annual Exempt Amount and repurchasing inside an ISA, sheltering future gains and dividends from tax. The CalcHub Bed-and-ISA calculator can help model this.
£3,000 — the first £3,000 of net capital gains each tax year is free of CGT. This allowance has been cut significantly from £12,300 in 2022/23.
18% for basic-rate taxpayers and 24% for higher/additional-rate taxpayers on all assets (shares, property, other). From April 2026, the rates on non-residential assets rose from 10%/20% to 18%/24%.
No — gains on your only or main residence are exempt under Principal Private Residence (PPR) relief. If you let the property or use part of it for business, partial CGT may apply.
No — any gains made within a Stocks and Shares ISA are completely free of CGT, regardless of size. This is why ISA-first investing is so important.
Yes — net capital losses in the current year reduce your net chargeable gains. Unused losses can be carried forward indefinitely and used in future years against gains above the Annual Exempt Amount.
Bed and ISA involves selling investments outside an ISA (realising gains within the Annual Exempt Amount) and repurchasing them inside an ISA. Future gains and dividends on those assets then attract no CGT or Dividend Tax. It is one of the most effective CGT-management strategies.
Capital gains on UK residential property must be reported and paid within 60 days of completion. Other assets are reported via Self Assessment and payment is due by 31 January following the tax year.
BADR (formerly Entrepreneurs' Relief) gives a reduced CGT rate of 18% (2026/27) on qualifying business disposals up to a lifetime limit of £1,000,000. The rate rose from 14% in 2025/26 and 10% before April 2025.
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