Capital gains tax for individuals: rates, reliefs and reporting
Capital gains tax applies when you sell or give away something that has gone up in value. The annual exemption is now £3,000, so more people have gains to report, and the timing and ownership of a sale can change the bill.
By Andy Jackson, Head of Accountancy
Updated 26 October 2026
5 min read
Key takeaways
- The first £3,000 of gains each tax year is exempt. Gains above that are taxed at 18% within the basic-rate band and 24% above it.
- Your main home is normally exempt. Second homes, let property, shares and funds are not.
- Where tax is due on UK residential property, the gain must be reported and the tax paid within 60 days of completion.
- Transfers between spouses and civil partners are tax-free, and assets held at death are not subject to capital gains tax.
What is taxed
Capital gains tax is charged on the gain when you dispose of an asset, which includes selling it, giving it away or exchanging it. The gain is the difference between what you receive, or the market value for a gift, and what you paid, less allowable costs such as purchase and sale fees and the cost of improvements.
Assets commonly subject to capital gains tax include shares and funds held outside an ISA or pension, second homes and let property, and valuable possessions worth more than £6,000. Cars, your main home in most cases, ISAs, pensions and UK government gilts are exempt.
The rates and the annual exemption
For 2026/27 the annual exempt amount is £3,000 per person. It cannot be carried forward if unused. Gains above it are added to your taxable income to work out the rate:
- 18% on the part that falls within your remaining basic-rate band;
- 24% on the part above it.
These rates apply to most assets, including residential property. Trustees and personal representatives pay 24% on gains above their own exemption.
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Your main home
Private residence relief normally removes the gain on your only or main home. If you have lived elsewhere for part of the time, the relief is reduced in proportion, although the final nine months of ownership always qualify. If you own two homes, you can nominate which is your main residence for tax purposes, usually within two years of acquiring the second one. Our guide to selling a second home covers this in more detail.
Spouses, gifts and death
Assets passed between spouses or civil partners who live together are treated as passing at no gain and no loss. This lets a couple use two annual exemptions and two basic-rate bands on a sale. Separated couples have until the end of the third tax year after separation to transfer assets on the same basis, and longer under a court order.
A gift to anyone else, including your children, is treated as a sale at market value, so tax can be due even though you received nothing. When you die, no capital gains tax is charged and your beneficiaries inherit the assets at their value at the date of death. This can affect whether it is better to give an asset away now or leave it in your will, which is also an inheritance tax question.
Shares and funds
Shares of the same company are pooled and given an average cost. Two matching rules apply first: shares bought back on the same day, or within 30 days after a sale, are matched with that sale. Selling and immediately rebuying the same shares therefore does not create a loss to use.
Losses must be claimed within four years of the end of the tax year in which they arose. Once claimed, they are set against gains of the same year first and then carried forward.
Reporting and paying
For UK residential property where tax is due, you must report the sale and pay the tax within 60 days of completion using HMRC's online capital gains tax service. Non-residents must report every disposal of UK property, even when no tax is due. For other assets, you report gains on your self assessment return and pay by 31 January after the end of the tax year. You must report if your gains exceed the annual exemption. If you are registered for self assessment, you must also report when your total sale proceeds exceed £50,000, even when no tax is due.
Spreading sales across two tax years, sharing ownership with a spouse first or selling in a year with less other income can each reduce the tax. For capital gains tax the sale takes place when contracts are exchanged, so these steps need to be taken before exchange.
Frequently asked questions
What is the capital gains tax allowance for 2026/27?
The annual exempt amount is £3,000 per person. Married couples and civil partners each have their own.
What are the capital gains tax rates?
18% on gains within your remaining basic-rate band and 24% above it. The same rates apply to residential property.
Do I pay capital gains tax when I give something to my children?
Possibly. A gift is treated as a sale at market value, so tax can be due on any increase in value since you acquired it.
How long do I have to report a property gain?
60 days from completion for UK residential property where tax is due.
Sources & further reading
This article is general information, not advice. Tax, financial and legal rules change and their effect depends on your circumstances. Check the current position and take professional advice before acting. Last reviewed 26 October 2026. Totus One Limited (company no. 16855798).
Founder of Buzz Accounting, Practice Group and Founder Capital, Andy has built businesses across accountancy, fintech, private equity and e-commerce. He brings the discipline of a COO, the mindset of a founder and the connections of an investor — and a conviction that most businesses aren't broken, they're just leaking time and money.
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