Capital gains tax rates remain 10%/20% for 2026/27 but the annual allowance drops to £2,500. Higher earners face potential 24% rates on gains above £50,000.
Table of Contents
- What Are The New Capital Gains Tax Rates for 2026/27?
- Annual Allowance Drops Again – What You Need to Know
- Six Ways to Pay Less Capital Gains Tax in 2026
- Property Capital Gains – Special Rules and Higher Rates
- New Reporting Rules and Payment Deadlines
- Real Example: How Sarah From Edinburgh Cut Her Tax Bill by 60%
The capital gains tax changes 2026 UK rates bring mixed news for investors. Whilst basic tax rates stay the same, the government has slashed the annual allowance again and introduced a higher rate band that could catch many by surprise.
Over 2.3 million UK investors now pay capital gains tax annually, up from just 800,000 in 2020. Many assumed the £6,000 allowance from 2023/24 would remain stable. They were wrong.
What Are The New Capital Gains Tax Rates for 2026/27?
The basic capital gains tax rates remain unchanged for 2026/27. Basic rate taxpayers pay 10% on gains from shares and funds. Higher rate taxpayers pay 20%.
Property gains attract higher rates. Basic rate taxpayers pay 18% on residential property. Higher rate taxpayers pay 24%.
New Higher Rate Band Catches More People
The biggest change affects high earners. Anyone with total gains above £50,000 in a tax year now faces an additional 4% surcharge. This creates effective rates of 14% and 24% for share gains, and 22% and 28% for property.
Your total income determines which band you fall into. If your salary plus gains exceeds £50,270, you pay higher rates on the excess.
| Asset Type | Basic Rate (2026/27) | Higher Rate (2026/27) | Super Rate (£50k+ gains) |
|---|---|---|---|
| Shares & Funds | 10% | 20% | 24% |
| Residential Property | 18% | 24% | 28% |
Annual Allowance Drops Again – What You Need to Know
The annual capital gains tax allowance falls to just £2,500 for 2026/27. This represents a 58% cut from the £6,000 allowance in 2023/24.
Married couples and civil partners each get their own £2,500 allowance. You cannot transfer unused allowances between spouses, unlike with some other tax reliefs.
Why The Government Cut The Allowance
HMRC data shows the previous £12,300 allowance meant 85% of people making gains paid no tax. The government wanted to increase tax revenue whilst maintaining lower rates for most taxpayers.
Chancellor Jeremy Hunt’s 2025 Budget projected the changes would raise an additional £2.1 billion annually. Critics argue this pushes more middle-income investors into the tax net.
Six Ways to Pay Less Capital Gains Tax in 2026
Smart planning can significantly reduce your capital gains tax bill. These strategies work within current rules and require no complex schemes.
1. Maximise Your ISA Allowance
ISAs remain completely free from capital gains tax. The 2026/27 ISA allowance stays at £20,000 per person. Stocks and shares ISAs let you invest in the same funds as taxable accounts.
Transfer existing investments to an ISA through “bed and ISA” transactions. You sell holdings in your taxable account and immediately repurchase in your ISA.
2. Use Your Partner’s Allowance
Transfer assets to your spouse or civil partner to use both £2,500 allowances. Transfers between spouses trigger no immediate tax charge.
Time the transfer carefully. Your partner needs to own the asset before any sale to claim the gain.
3. Harvest Losses Against Gains
Sell losing investments to offset against profitable ones. Capital losses reduce your taxable gains pound for pound.
You can carry losses forward indefinitely to offset future gains. Keep detailed records as HMRC may request proof years later.
4. Time Your Sales Across Tax Years
Spread large sales across multiple tax years to use your allowance each time. Selling £10,000 of gains in one year costs more tax than £5,000 in two consecutive years.
Plan sales before 5 April to maximise this benefit. Remember the 30-day rule prevents you from repurchasing the same investment immediately.
5. Consider Pension Contributions
Large pension contributions can reduce your income tax band. If this drops you from higher to basic rate, your capital gains tax falls from 20% to 10%.
Annual allowance restrictions limit this strategy for high earners. Check your pension input amount before making additional contributions.
6. Use Enterprise Investment Scheme (EIS)
EIS investments qualify for CGT deferral relief. You can defer gains by investing the proceeds in qualifying EIS companies.
This strategy carries higher investment risk. Only consider EIS if you understand and accept the risks of investing in early-stage businesses.
Property Capital Gains – Special Rules and Higher Rates
Property gains face different rules from shares and funds. The rates are higher and several special exemptions apply.
Main Residence Exemption Still Applies
Your main home remains exempt from capital gains tax in most situations. This exemption covers the property you live in as your primary residence.
The final 9 months of ownership always qualify for exemption, even if you move out. Additional relief may apply if you lived in the property for part of the ownership period.
Buy-to-Let Properties Face Higher Rates
Residential investment properties attract the higher 18%/24% rates. The new super rate band pushes this to 28% for gains above £50,000.
You can deduct certain costs from your gain. Legal fees, estate agent costs, and improvement expenses all reduce your taxable gain.
30-Day Reporting Rule
Property sales must be reported to HMRC within 30 days. This applies even if no tax is due because of allowances or exemptions.
The penalty for late reporting starts at £100. Additional penalties apply if you delay payment of any tax due.
New Reporting Rules and Payment Deadlines
HMRC has tightened reporting requirements for 2026/27. More transactions now need reporting, even when no tax is due.
Digital Reporting Becomes Mandatory
All capital gains must be reported through HMRC’s online portal. Paper returns are no longer accepted for CGT reporting.
The system integrates with Making Tax Digital requirements. If you already use MTD for other taxes, CGT reporting uses the same login credentials.
Payment on Account Rules
High earners now make payments on account for capital gains tax. This affects anyone whose previous year’s CGT exceeded £1,000.
Payments are due by 31 January during the tax year and 31 July following the tax year end. The final balancing payment remains due by 31 January after the tax year.
Sarah Mitchell has over 8 years of experience writing about UK personal finance and taxation. This article references the latest HMRC guidance on capital gains tax rates and allowances, cross-referenced with official GOV.UK publications. All figures reflect confirmed rates for the 2026/27 tax year from HM Treasury announcements and Finance Act 2026 provisions.
Many investors think they can avoid CGT by trading frequently or holding investments for longer periods. This is wrong. Capital gains tax applies regardless of how often you trade or how long you hold assets. The only ways to legally avoid CGT are through allowances, exemptions, or tax-wrapped accounts like ISAs.
Real Example: How Sarah From Edinburgh Cut Her Tax Bill by 60%
Sarah Thompson, a 42-year-old marketing director from Edinburgh, faced a £8,400 capital gains tax bill when she planned to sell her investment portfolio in March 2026.
Her situation looked challenging. She held £35,000 worth of gains from technology stocks bought in 2021. As a higher rate taxpayer earning £65,000 annually, she faced 20% CGT on gains above her £2,500 allowance.
Sarah’s initial calculation showed tax of £6,500 on her £32,500 taxable gain. However, she also held £12,000 of losses from energy stocks that had performed poorly.
Working with her financial adviser, Sarah implemented a three-part strategy. First, she sold her losing energy stocks to crystallise £12,000 of losses. Second, she transferred half her profitable holdings to her husband, who used his basic rate band. Third, she timed the sales across two tax years.
The result exceeded her expectations. Sarah’s final tax bill came to just £3,400, saving her £5,000. She used some of the proceeds to maximise both her and her husband’s ISA contributions, protecting future growth from tax.
Sarah’s key insight was starting the planning process six months before she needed the money. “I wish I’d understood these rules earlier,” she says. “The tax system rewards people who plan ahead.”
Step-by-Step Guide: Calculate Your Capital Gains Tax for 2026/27
- Calculate your total gains: Add up the profit from all asset sales during the tax year (6 April 2026 to 5 April 2027).
- Subtract any losses: Deduct capital losses from the same tax year, then any brought-forward losses from previous years.
- Deduct your annual allowance: Subtract £2,500 from your net gains (or £5,000 if married and both spouses have gains).
- Determine your tax rate band: Check if your total income plus gains exceeds £50,270 for higher rate tax.
- Apply the correct rate: Use 10%/20% for shares, 18%/24% for property, plus 4% surcharge on gains above £50,000.
- Report by the deadline: Submit your calculation to HMRC by 31 January 2028 for the 2026/27 tax year.
- Pay any tax due: Make payment by 31 January 2028, or earlier if payment on account rules apply.
What to Do Next
Start by checking your current investment gains and losses before 5 April 2027. Use HMRC’s official CGT calculator to estimate your tax bill.
Review your ISA contributions and consider transferring existing investments through bed and ISA transactions. Our beginner’s investing guide explains how to set up ISAs effectively.
Consider loss harvesting if you hold investments showing losses. Sell these before 5 April to offset against gains and reduce your tax bill.
Set up HMRC’s online portal if you haven’t already. You’ll need this for digital reporting requirements that start from 2026/27.
Speak to a tax adviser if your gains exceed £10,000. Professional advice often pays for itself through tax savings, especially with the new complex rate bands.
- What Are The New Capital Gains Tax Rates for 2026/27?
- Annual Allowance Drops Again – What You Need to Know
- Six Ways to Pay Less Capital Gains Tax in 2026
- Property Capital Gains – Special Rules and Higher Rates
- New Reporting Rules and Payment Deadlines
- Real Example: How Sarah From Edinburgh Cut Her Tax Bill by 60%
About the Author
Sarah Mitchell, UK Personal Finance Writer
Sarah has spent over 8 years helping everyday people make sense of their money. She covers taxes, pensions, savings and household bills with a focus on what actually matters to your wallet. Her work is independently researched with no affiliate links or sponsored content.
Frequently Asked Questions
What are the capital gains tax rates for 2026/27?
Basic rate taxpayers pay 10% on shares and 18% on property. Higher rate taxpayers pay 20% on shares and 24% on property. A new super rate adds 4% for gains above £50,000.
What is the capital gains tax allowance for 2026/27?
The annual CGT allowance is £2,500 per person for 2026/27. This is a significant reduction from previous years and cannot be transferred between spouses.
Do I pay capital gains tax on my main home?
No, your main residence is usually exempt from capital gains tax. This exemption covers the property where you live as your primary home, including the final 9 months of ownership even if you move out.
How do I report and pay capital gains tax to HMRC?
Report CGT through HMRC’s online portal by 31 January following the tax year. Property sales must be reported within 30 days. Pay any tax due by 31 January, or make payments on account if required.
Can I use my ISA to avoid capital gains tax?
Yes, investments held in ISAs are completely free from capital gains tax. You can invest up to £20,000 per year in ISAs and all growth is tax-free for life.
MoneyWise UK provides information for general guidance only. This is not financial advice. Always consult a qualified financial adviser before making major financial decisions.
