Capital Gains Tax

The annual exempt amount (AEA) is £3,000 for 2025/26 and will be unchanged in 2026/27. Gains above this level are taxed as follows:
• 14% (rising to 18% from 6 April 2026) if the gains qualify for Business Asset Disposal Relief (BADR) or Investors’ Relief, up to a lifetime limit of £1 million.
• 18% if the gains fall within any unused basic rate band.
• 24% for gains above the basic rate band.

Assets transferred between married couples or civil partners do not give rise to a CGT charge; instead, the recipient takes over the CGT cost of the donor. This means that, when the asset is eventually sold by the recipient, the gain or loss will reflect the combined ownership period.

Gifts to other family members will produce capital gains or losses, using the market value at the time of the gift as deemed proceeds. However, where the asset is a qualifying business asset (e.g. unquoted trading company shares), a joint ‘holdover relief’ election will enable any gain to be deferred.

Non-residents are not generally subject to UK CGT. There is an exception to this rule, however, for disposals of UK immoveable property (i.e. land and buildings).

Tax planning points
• The AEA cannot be carried forward or transferred to a spouse, so where possible aim to make disposals before 6 April 2026 to utilise this year’s AEA.

• Consider transferring assets (wholly or partly) to your spouse or civil partner, to utilise their AEA or capital losses on a subsequent disposal. Such transfers must be made outright and without preconditions to be effective for tax purposes.

• Where disposals of assets are eligible for BADR or Investors’ Relief, consider bringing forward disposals to this current tax year, as the tax rate is going up to 18% in 2026/27.

• Consider carefully when you will make any disposal, as the timing will determine when any CGT is due and may affect the amount of CGT payable.

Example-Reshmin
Reshmin is a basic rate taxpayer (with £7,000 of basic rate band unused) in 2025/26 but expects to be a higher rate taxpayer in 2026/27. Her sole disposal in 2025/26 of some non-residential land takes place on 31 March 2026 and realises a capital gain of £19,000.

• Her taxable gain (i.e. after AEA) is £16,000 and her CGT liability will be £3,420 [(£7,000 @ 18%) + (£9,000 @ 24%)].
• This will be payable on 31 January 2027.

If, instead, the disposal is made early in 2026/27 (say, on 30 April 2026):
• Her taxable gain (i.e. after AEA) is still £16,000 but her CGT liability
• will be fully at 24%, i.e. £3,840.
• This would be payable on 31 January 2028.