What is Capital Gains Tax? UK Definition 2026/27
Quick Answer
Tax on profit when you sell or dispose of an asset that has increased in value.
Definition of Capital Gains Tax
Capital Gains Tax (CGT) is charged on the profit (gain) when you sell or dispose of an asset that has increased in value. This includes shares, second properties, and valuable personal possessions. Your main home is usually exempt. The tax-free annual exempt amount is £3,000 for 2026/27.
Capital Gains Tax — Key Facts for 2026/27
| Annual Exempt Amount | £3,000 |
| Basic rate | 18% (24% property) |
| Higher rate | 24% (24% property) |
| BADR rate | 14% |
How Capital Gains Tax Works — Example
- 1Shares sold for: £50,000
- 2Original cost: £20,000
- 3Gain: £30,000
- 4Less annual exempt: £3,000
- 5Taxable gain: £27,000
- 6Tax at 24% (higher rate): £6,480
How Capital Gains Tax Affects Your Tax
CGT rates increased significantly from October 2024. The reduced annual exempt amount means more gains are now taxable. Business Asset Disposal Relief (BADR) at 14% provides valuable relief for qualifying business disposals up to £1m lifetime limit.
Official HMRC Guidance on Capital Gains Tax
For official guidance, refer to HMRC's documentation. Tax rules can change, so always verify current rates and thresholds on gov.uk.
HMRC: Capital Gains TaxFrequently Asked Questions about Capital Gains Tax
Related Tax Terms
Accuracy Note
This information is for guidance only and is based on 2026/27 tax year rates. Tax rules are complex and your circumstances may differ. For personal advice, consult a qualified accountant or tax adviser.