The basic idea is simple enough. A capital gain is the rise in value of an asset between buying it and disposing of it. Buy an investment for £20,000, sell it later for £30,000, and the gain is £10,000 before costs and reliefs. CGT may be due on gains above the annual exempt amount, depending on the asset, the size of the gain, and the taxpayer’s wider income position.
For 2026/27 the annual exempt amount is £3,000 per person. It is much lower than it used to be (£12,300 as recently as 2022/23), which means CGT is no longer a concern only for people selling second homes or businesses. Investors holding shares, funds, investment trusts or other assets outside ISAs and pensions may find themselves within scope far more easily than before.
The rates themselves are worth being precise about, because the timing is easy to get wrong. Individuals pay 18% on gains that fall within their basic Income Tax band and 24% above it. These rates were set at the Autumn Budget on 30 October 2024, when the lower rate for shares and other non-property assets rose from 10% to 18%, and the higher rate from 20% to 24%, bringing them into line with the rates that already applied to residential property. They have not changed for 2026/27. Anyone who thinks CGT rates have just gone up this April is thinking of dividend tax, not capital gains. Trustees and personal representatives pay a flat 24%, with no basic-rate band to soften it. One genuine change for 2026/27: Business Asset Disposal Relief and Investors’ Relief, which give a reduced rate on qualifying business disposals, rose from 14% to 18% on 6 April 2026, continuing a staged climb from the old 10% rate. Anyone planning a business exit should factor that in.
It helps to be clear on what actually counts as a disposal. Selling an investment is the obvious case. But giving an asset away, swapping it for something else, or receiving compensation for it can all count too. Transfers between spouses and civil partners are usually on a no gain, no loss basis, but transfers to other family members can trigger a taxable event even though no money changes hands. This surprises people regularly. Tax law is rarely as sentimental as families are.
Not everything is caught. Gains inside ISAs are normally CGT-free. Pension investments are sheltered while they stay inside the pension. A main home is usually covered by Private Residence Relief, subject to conditions. Personal possessions, gilts and a handful of other assets get special treatment. But “I never took the profit out” is no defence once an asset outside a wrapper has actually been sold. The sale itself is what matters, not what happens to the proceeds afterwards.
Record-keeping is the unglamorous part that actually does the work. Investors need acquisition costs, sale proceeds, dealing costs, reinvested income where relevant, corporate actions, and any earlier part-disposals. Platform records help, but they are not always complete across provider changes, transfers, legacy holdings or inherited assets. An old contract note is not exciting to look at, but it can save a great deal of confusion later.
Funds add a layer of complication most people do not expect. Accumulation units reinvest income inside the fund rather than paying it out, and that reinvested income can affect the base cost used for CGT. Equalisation payments can matter too. Nobody needs to become a tax technician over this, but it is worth knowing that the gain is not always simply “what I got minus what I paid”.
The annual exemption creates planning opportunities, though they need care. Some investors realise gains gradually across several tax years rather than letting one large taxable gain build up. Others use Bed and ISA strategies, selling outside an ISA and repurchasing inside one, to move future growth into a tax-efficient wrapper. Market movement, dealing costs, spread and suitability all matter here. The aim is never to manufacture transactions for their own sake. It is to use the allowances sensibly as part of a wider plan.
Losses can be useful too. A loss on disposal can be offset against gains, and in some cases carried forward. But losses need reporting to HMRC within the required window if they are to be used later. Once again, the dull administrative step turns out to be the valuable one.
CGT can distort investment behaviour in unhelpful ways. Some investors will not sell a poor holding because they do not want to crystallise a gain elsewhere. Others sit on a concentrated position for years because the tax bill feels painful, even as portfolio risk quietly builds. Tax should matter, but it should not be the only factor in the room. A tax-efficient bad investment is still a bad investment, and a concentrated holding can carry more risk than the tax being deferred is worth.
There is a psychological wrinkle too. People tend to think of tax as something paid on income, not on decisions. CGT is a decision tax in the sense that it usually appears at the point something changes: selling, gifting, rebalancing, simplifying, moving provider, or helping family. That can discourage useful action. Good planning brings the tax into the conversation early, so it gets managed rather than discovered after the fact.
For most clients, the practical checklist is short. Know which assets sit outside ISAs and pensions. Keep records. Understand the £3,000 exemption and the fact that the 18%/24% structure has now been stable since late 2024. Review gains before the tax year end rather than after. Think about whether assets could be held more efficiently going forward. Take care with gifts and transfers. Get advice before large disposals, especially where property, business assets, inherited assets or trusts are involved.
None of this is a reason to be nervous of investing outside wrappers. General investment accounts still have their place, particularly once ISA and pension allowances are used up. But they need watching. A £3,000 exemption and 18%/24% rates make that monitoring more important than it once was, not less.
The tax appears when you sell. The planning needs to start long before that.
Sources
GOV.UK, Capital Gains Tax rates and allowances, 2026 to 2027.
GOV.UK, Capital Gains Tax: what you pay it on, rates and allowances.
GOV.UK, Changes to the rates of Capital Gains Tax (Autumn Budget 2024).
GOV.UK, Tax when you sell shares.
GOV.UK, Individual Savings Accounts overview.
