The change in CGT allowance and rates
From 6 April 2026, the annual exempt amount for Capital Gains Tax (CGT) dropped significantly, and new rates apply: for gains after that date, basic rate taxpayers pay 18%, and higher/additional rate taxpayers pay 24%, on disposals of chargeable assets.(gov.uk)
The exemption itself (i.e. the tax-free allowance for gains) has also been reduced – part of efforts to raise more revenue and tighten thresholds.(gov.uk)
Implications for different types of investors
- Casual investors: if you expected to sell shares or investments and held gains near the old exemption threshold, you may now pay CGT where you didn’t before.
- Property owners: selling second homes or investment property will involve more careful timing and consideration of allowable expenses to mitigate gains.
- Trustees or personal representatives, who now pay 24% as higher rate from start of the 2026-27 tax year.(gov.uk)
Strategies to reduce CGT liability
- Use other reliefs where available—Business Asset Disposal Relief, Investors’ Relief, etc. These can reduce effective rates or exempt certain gains.
- Plan asset disposals across tax years, to utilise lower-rate bands or spread gains to avoid pushing into higher rate.
- Offset gains with losses—if you have loss-making investments, dispose of them in the same CGT year to reduce taxable amount.
- Hold investments past death—when assets pass on death, capital gains are generally not charged, resetting base cost.
- Use ISAs and other exempt wrappers—investing via Individual Savings Accounts or UK pension schemes can avoid CGT entirely.
Real examples
- Alice, with £50,000 taxable income, plans to sell shares for a gain of £10,000 in Year 1 and £5,000 in Year 2. Under previous rates, she may have avoided CGT altogether; now, in Year 1, she’ll pay 18% on gains exceeding the reduced exemption. Spreading disposals may reduce exposure.
- Bob, a landlord selling a buy-to-let property: high property-related costs can be deducted to lower gain and keep under higher rate thresholds.
What investors should do now
- Review your portfolio: identify any assets with potential gains and decide whether a disposal this tax year or next is more tax-efficient.
- Keep meticulous records of purchase costs, improvement costs, legal fees, and allowable reliefs—these reduce the gain.
- Speak with a tax adviser for large or complex disposals—business assets, inherited assets often have shaping rules.
- Be aware of changes in rates and thresholds, including interplay with income tax bands—higher income may push gains into higher CGT rates.
- Use reporting deadlines: CGT is due by 31 January following the end of the tax year in which the disposal occurred. Plan ahead.
Summary
The 2026-27 changes to Capital Gains Tax make thresholds tighter and rates heavier for many taxpayers—especially higher-earning individuals and property or investment sellers. But with forward planning—timing, reliefs, loss utilization—there are legitimate ways to keep your CGT liability in check.