The Capital Gains Tax essentials you need to know

The amount of Capital Gains Tax (CGT) investors collectively pay is set to soar over the next six years.

According to a Telegraph article (11 December 2025), the Office for Budget Responsibility (OBR) has adjusted its estimate for how much will be raised through taxes, including CGT.

The OBR now predicts revenue from CGT will reach £114 billion between the 2025/26 tax year and 2029/30 – an increase of £6 billion on its previous forecast. Indeed, by 2030, the levy is expected to double in just six years, generating £30 billion annually for the government.

Investments that aren’t held in a tax-efficient wrapper may be liable for CGT when they are disposed of. Read on to find out the CGT essentials investors need to know. 

Capital Gains Tax may be due when you dispose of certain assets

CGT is a tax on the profits you make when you dispose of certain assets, including:

• Most personal possessions worth £6,000 or more, apart from your car
• Property that’s not your main home
• Shares that aren’t held in a tax-efficient wrapper
• Business assets.

It’s important that investors and others disposing of assets are aware of the CGT rules to avoid an unexpected bill.

The rate of CGT you’ll pay will depend on your tax band and any other income you’ve received during the tax year.

In 2026/27, the CGT rates are:

• 24% if you’re a higher- or additional-rate taxpayer who has made gains from residential property or other chargeable assets
• 18% if you’re a basic-rate taxpayer and your gains, combined with your taxable income for the tax year, fall within the basic Income Tax band. Gains above the basic-rate band will be liable for CGT at a rate of 24%.

As an investor, there are allowances and other ways to improve tax efficiency that could be useful when managing your CGT liability.

The Annual Exempt Amount is £3,000 in 2026/27

Each tax year, you have a tax-free allowance known as the “Annual Exempt Amount”. In 2026/27, this is £3,000 for individuals. The portion of your gains that falls below this threshold will not be liable for CGT.

You cannot carry forward your unused Annual Exempt Amount to a new tax year.

As a result, you might want to consider spreading the disposal of your assets across several years to use the Annual Exempt Amount to reduce your tax bill. 

In addition, you can pass assets to your spouse or civil partner without CGT being due. As the Annual Exempt Amount is an individual allowance, doing this and planning as a couple could mean you can make up to £6,000 in gains each tax year before tax is due.

Investing in ISAs or pensions could be tax-efficient

As an investor, there are tax wrappers you could use to improve your tax efficiency and potentially reduce a CGT bill. 

Investments held in a Stocks and Shares ISA aren’t subject to CGT. In 2026/27, you can place up to £20,000 into ISAs during the tax year. 

Similarly, investments held in your pension aren’t subject to CGT, and you may also be able to claim tax relief on your contributions for a further boost.

However, pensions are a long-term investment, and you can’t usually access the money held in one until you’re 55 (rising to 57 in 2028). As a result, a pension may not be suitable if you plan to use the money before you retire or if you don’t have other assets you can draw on in an emergency.

Contact us

We may be able to help make tax efficiency part of your financial plan by identifying allowances and strategies that suit your needs. If you have any questions about CGT or other taxes that affect your personal finances, please get in touch.

Please note:

This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. 

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance. 

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts. 

The Financial Conduct Authority does not regulate tax planning.