What is Capital Gains Tax?
CGT is a tax charge applied to the gain from the sale of something you own. It’s calculated from the gain made, the increase in value of the sale price compared to the purchase price, for an asset held for more than one year.
Typically it’s applicable to:
* Shares
* Investment funds
* Second properties
* Inherited properties
* The sale of a business
* Valuables including art, jewellery, and antiques
* Assets transferred at below their market value
Capital gains on these assets are currently taxed at different rates than those of income tax. This is because purchasing such assets is seen as taking a risk, either entrepreneurial or investment, so the additional burden of risk carries greater potential reward.
How much is Capital Gains Tax in the UK?
The CGT rate you’re charged depends on two things:
1. Whether you’re a basic rate, higher rate, or additional rate tax payer
2. The type of asset you’ve sold
When do you have to pay Capital Gains Tax?
CGT isn’t as simple as declaring your gain and applying the relevant rate. Firstly there is the annual CGT allowance of £3,000. This is the amount of profit you can make before CGT is applied. If you’re gains are under this
amount in the tax year then there is no CGT liability. However, you can’t carry forward to the following year if you don’t make use of the allowance when selling your assets.
For those in need of further information, Cangaf Ltd is here to help. Reach out now for a free quote, and we’ll assist you with your accounting requirements diligently!
Frequently Asked Questions
What is the Capital Gains Tax allowance for 2026/27?
£3,000 per person.
What are the CGT rates?
18% within the basic rate band and 24% above it, for property and other assets.
When do I have to report a property sale?
Within 60 days of completion for UK residential property where tax is due.
Related guides: SA108 Capital Gains Tax Return: When and How to Report Gains (2026/27) · 6 Tips When you sell property – Capital Gains Tax
