Capital Gains Tax (CGT) is a key consideration whenever you dispose of property or shares in the UK. While recent Budgets have made changes to the wider tax landscape, the most effective way to manage CGT is still through a clear understanding of the reliefs that remain available and how they apply in practice.
This article focuses on how CGT applies to property and shares, highlights the main reliefs you should be aware of, and places these within the context of the recent Autumn Budget announcements.
1. CGT on Property and Available Reliefs (2025/26)
CGT commonly arises on the disposal of:
• Buy-to-let properties
• Second homes
• Land
Your main residence may be fully or partially exempt depending on usage.
CGT Rates on Property – 2025/26
For disposals in the 2025/26 tax year, residential property gains are taxed at:
• 18% where the gain falls within the basic rate income tax band
• 24% where the gain falls above the basic rate band
The gain is added to your taxable income to determine which rate applies.
Annual CGT Exempt Amount
• £3,000 per individual for 2025/26
Only gains above this amount are subject to CGT.
Key Property Reliefs
Private Residence Relief (PRR)
Private Residence Relief is the most valuable CGT relief for property owners.
It can exempt all or part of the gain where:
• The property was your only or main residence, and
• You occupied it as your home
PRR generally covers the period of occupation, plus a final 9-month period of deemed occupation even if you were not living there when the property was sold.
Lettings Relief
Lettings Relief now applies only in very limited circumstances. In most cases, it is available only where:
• The property was once your main residence, and
• You lived in the property at the same time as the tenant
As a result, this relief is no longer relevant for most landlords.
Allowable Costs and Capital Improvements
The chargeable gain can be reduced by deducting:
• Purchase costs (legal fees, Stamp Duty Land Tax)
• Selling costs (estate agent and solicitor fees)
• Capital improvements (extensions, structural alterations)
Routine repairs and maintenance are not deductible for CGT.
Reporting and Payment
CGT on UK residential property must be reported and paid within 60 days of completion
2. CGT on Shares and Available Reliefs (2025/26)
CGT may arise on the disposal of:
• Listed shares and securities
• Unlisted shares and securities
• Cryptoassets
CGT Rates on Shares – 2025/26
For disposals in 2025/26:
• 18% on gains falling within the basic rate band
• 24% on gains above the basic rate band
These rates now broadly align with residential property CGT rates.
Annual CGT Exempt Amount
• £3,000 per individual (shared across all disposals in the tax year)
Key Share Reliefs
Business Asset Disposal Relief (BADR)
Business Asset Disposal Relief (formerly Entrepreneurs’ Relief) may apply to qualifying disposals of:
• Shares in trading companies
• Certain business assets
For disposals in 2025/26, BADR:
• Applies a reduced CGT rate of 14% (previously 10%)
• Is subject to a £1 million lifetime limit
Although still valuable, this relief is now significantly less generous than in the past, making timing and planning critical.
Investors’ Relief (IR)
Investors’ Relief provides a 14% CGT rate (previously 10%) on gains from shares in unlisted trading companies acquired on or after 17 March 2016, provided:
• Shares are held for at least 3 years, and
• The investor is an external, non-employee investor
The lifetime limit for Investors’ Relief is reduced from £10 million to £1 million for disposals after October 30, 2024.
Capital Losses
Capital losses on shares can be:
• Offset against gains in the same tax year, or
• Carried forward indefinitely to offset future gains
Loss utilisation remains an important CGT planning tool.
3. Changes to Be Aware Of from 2026/27
While the core CGT framework remains in place, further changes take effect from 6 April 2026, which should be considered when planning disposals.
Key Changes from 2026/27
• Business Asset Disposal Relief rate and Investor Relief increase to 18% from 14%, further reducing the benefit of the relief
• The £1 million lifetime limit for BADR and Investor Relief remains unchanged
• The annual CGT exemption is expected to remain low, significantly limiting tax-free gains
• CGT rates on property and shares remain aligned
For business owners and shareholders considering an exit, this means that earlier disposals may attract a lower effective tax rate than those completed in later years.
Conclusion
Capital Gains Tax requires careful planning. Whether you are selling an investment property, realising gains on shares, or preparing for a future disposal, understanding and applying the correct CGT reliefs can make a substantial difference to the final tax outcome.
With reliefs becoming more restricted and allowances tighter, early advice and careful structuring are more important than ever to ensure you don’t miss valuable opportunities to reduce CGT legitimately.
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