Capital gains tax explained, with worked examples

Este conteúdo está em inglês.

Capital gains tax is charged when you sell or give away something that has risen in value, such as shares, a second property or a business asset. Many people only meet it once, when they sell something they have owned for years, and the rules can feel unfamiliar. This guide explains how the gain is worked out, how the annual exempt amount and the rates apply for 2026/27, and works through two examples. Figures checked against GOV.UK on 15 October 2026.

Por Valtrinity. Atualizado em 18 de outubro de 2026.

What counts as a gain

A capital gain is the profit you make when you dispose of an asset for more than it cost you, after allowable costs. A disposal includes a sale, but also a gift in many cases. The gain is measured as the sale price, minus the purchase price, minus costs such as legal fees and improvements that can be claimed.

Not everything is taxable. Your home is usually exempt if you lived in it throughout your ownership, and many everyday personal items are also outside the rules. Check the exemptions before assuming a gain is taxable.

• A gain is sale price minus purchase price and allowable costs.
• Gifts are often treated as disposals.
• Your main home is usually exempt.

The annual exempt amount

Each tax year you can make gains of up to £3,000 before any capital gains tax is due. This is called the annual exempt amount. It applies to each individual, and trusts receive a smaller allowance of £1,500. The exempt amount is deducted from your total gains for the year, not from each sale separately.

If your gains for the year are under £3,000, you do not pay tax on them, but you may still need to report them in some situations, so check the rules before assuming nothing is due.

• Individuals: £3,000 a year.
• Trusts: £1,500 a year.
• Deducted from the total gains for the year.

The rates for 2026/27

From 6 April 2026, gains are taxed at 18 per cent where they fall within the basic rate band, and at 24 per cent above it. The basic rate band is £37,700 of taxable income. Residential property is taxed at the same rates. Business Asset Disposal Relief is charged at 18 per cent, but it has its own conditions, so check GOV.UK before relying on it.

The key point is that gains are added on top of your taxable income. Your other income uses up the basic rate band first, so the gain is taxed at 18 per cent only for the part of the band that is left.

• 18%: gains within the basic rate band.
• 24%: gains above the basic rate band.
• Residential property: the same rates.
• Business Asset Disposal Relief: 18%, with its own conditions.

Worked example 1: a gain within the basic band

Take a person with taxable income of £20,000 who makes a gain of £12,600. Subtract the £3,000 annual exempt amount to get £9,600 of taxable gain. Their taxable income uses £20,000 of the £37,700 basic rate band, leaving £17,700 of band unused. The whole £9,600 falls inside that remaining band, so it is taxed at 18 per cent.

Tax due is £9,600 at 18 per cent, which is £1,728.

• Gain: £12,600, less £3,000 exempt, gives £9,600.
• Band left: £37,700 minus £20,000 is £17,700.
• Tax: £9,600 at 18%, which is £1,728.

Worked example 2: a gain that crosses the band

Now take the same person with taxable income of £20,000, but a gain of £52,600. After the £3,000 exempt amount, the taxable gain is £49,600. Only £17,700 of the basic rate band is left, so that part is taxed at 18 per cent. The remaining £31,900 is above the band and is taxed at 24 per cent.

Tax is £17,700 at 18 per cent, which is £3,186, plus £31,900 at 24 per cent, which is £7,656. The total is £10,842. This shows why a large gain in one year can cost much more than a small one.

• Taxable gain: £52,600 less £3,000 is £49,600.
• 18% on £17,700: £3,186.
• 24% on £31,900: £7,656.
• Total: £10,842.

Reporting and paying for UK residential property

Gains on UK residential property have a shorter timetable. You must report and pay the tax within 60 days of completing the sale, rather than waiting for the self assessment deadline. Missing the 60-day window can lead to penalties and interest, so plan the work before the sale completes.

Gather the purchase price, the sale price, the costs you can claim and any evidence of improvements. Keep these records for at least as long as the rules require, and check the GOV.UK guidance if the property was partly used for business or was not your main home for all of the time you owned it.

• Report and pay within 60 days of completion.
• Gather purchase price, sale price, costs and improvements.
• Check the rules if the property was not always your main home.

Using the capital gains tax calculator

The capital gains tax calculator on Valtrinity takes your taxable income, your gain and the type of asset, then applies the exempt amount and the bands to show the tax. Use it to test scenarios before you sell, for example to see whether spreading a sale across two tax years could reduce the rate applied.

• Enter taxable income and the gain.
• Test the effect of selling in different tax years.

Sources

Figures for the 2026/27 tax year, checked against the GOV.UK pages below on 15 October 2026.

• GOV.UK, Capital Gains Tax rates and allowances: https://www.gov.uk/capital-gains-tax/rates
• GOV.UK, Capital Gains Tax allowances: https://www.gov.uk/capital-gains-tax/allowances
• GOV.UK, Report and pay Capital Gains Tax: https://www.gov.uk/capital-gains-tax/report-and-pay-capital-gains-tax

Ferramentas citadas neste guia

Perguntas frequentes