Navigating Capital Gains Tax in the 2026/27 tax year

The CGT allowance: Three years at £3,000

The individual CGT annual exempt amount (AEA) has remained at £3,000 since 2024/25, and this continues unchanged for 2026/27. To put that in context, it stood at £12,300 as recently as 2022/23. That sustained reduction means a far greater proportion of investors with taxable portfolios are now liable for CGT each year, even on relatively modest gains, and many will be completing the CGT pages of a self-assessment return for the first time.

Trustees, other than for disabled beneficiaries, have an AEA of £1,500.

Understanding CGT rates in 2026/27

A notable development for 2026/27 is that the previous distinction between CGT rates on residential property and rates on other assets has been eliminated in terms of the headline rates.

From 6 April 2026, all chargeable gains for individuals are taxed at 18% or 24%, whether the asset is a property or a portfolio holding. The separate 60-day reporting obligation for residential property disposals remains in place, however.

• Basic rate taxpayers: 18% on gains that fall within their remaining basic rate band
• Higher and additional rate taxpayers: 24% on gains above the basic rate band
• Trustees and personal representatives also pay 24%.

This means that for most investors holding shares and funds in a general investment account, the headline rate is now 18% or 24% depending on income, regardless of asset type. The old 10%/20% rates that applied to non-property assets before October 2024 are firmly in the past.

As ever, gains are added to taxable income to determine which band applies. An investor who pays basic rate income tax on their salary could find a large capital gain pushes them into the higher rate band, resulting in a blended CGT liability.

Business Asset Disposal Relief and Investors' Relief in 2026/27

Both Business Asset Disposal Relief (BADR) and Investors' Relief have seen their CGT rates increase again this year, completing a phased rise that began at Autumn Budget 2024:

• disposals on or after 6 April 2026 attract a CGT rate of 18% under either relief, up from 14% in 2025/26 and 10% before October 2024.

BADR continues to be subject to a lifetime limit of £1 million of qualifying gains. Investors' Relief, which applies to shares in unlisted trading companies issued on or after 17 March 2016 and held for at least three years, where neither the investor nor a connected person is an officer or employee of the company, is also now capped at a lifetime limit of £1 million, reduced from £10 million with effect from 30 October 2024.

Clients with exposure to either relief should review their position carefully, since the advantageous gap between relief rates and the standard 24% rate has narrowed considerably.

Reporting thresholds: Who needs to report

Even where gains fall below the £3,000 AEA, reporting obligations can still apply. The CGT pages of a self-assessment return must be completed where:

• gains, before deducting losses, exceed the £3,000 annual exempt amount
• the gross disposal proceeds from all asset sales exceed £50,000 in the tax year.

Anyone registered for self-assessment needs to include details of disposals even where no tax is ultimately due if the £50,000 proceeds threshold is met. The real-time CGT reporting service is also available for non-property gains arising in 2026/27. Those already registered for self-assessment who use the service should be aware that they will still need to include details of the disposal in their self-assessment return.

Key reliefs and exemptions

Beyond the annual exempt allowance, several reliefs can reduce or eliminate a CGT liability.

• Private Residence Relief (PRR): No CGT arises on the disposal of an individual's only or main home. The relief extends to the final nine months of ownership even where the individual is not in residence, and this period can be extended for those who are disabled or in a care home. Partial use of a property for business purposes, or grounds exceeding a certain size, can restrict the relief.
• Transfers between spouses and civil partners: Assets can be transferred between spouses or civil partners on a no gain, no loss basis, meaning no CGT arises on the transfer itself. This allows couples to make full use of both individual AEAs, totalling £6,000 in 2026/27, and to position assets with the lower-income partner before a sale, potentially benefiting from the 18% rate rather than 24%.
• Hold-over relief: Hold-over relief is available on gifts of certain business and agricultural assets, and on transfers into or out of relevant property trusts. The gain is deferred until the recipient disposes of the asset.
• Capital losses: Losses realised in the same tax year can be offset against gains. Surplus losses can be carried forward indefinitely to shelter future gains. Capital losses must be claimed within four years of the end of the tax year in which they arose in order to be available for offset against future gains, so it is worth recording all disposals promptly.

Portfolio management: The practical pressures

The combination of a £3,000 AEA and a 24% higher-rate CGT charge create real friction for portfolio management:

• Portfolio drift: Investment managers can feel constrained in rebalancing taxable portfolios where doing so would crystallise gains. Over time, this can lead to an asset allocation that no longer reflects a client's intended risk profile, with implications for portfolio construction and, ultimately, for the ability to manage investments in line with the client's intended risk profile.
• Funding ISAs from a taxable portfolio: Selling invested assets to fund an ISA subscription remains a sensible long-term strategy but can trigger a CGT liability where accumulated gains exceed £3,000. A planned, gradual programme of disposal is generally preferable to large, one-off realisations.
• Corporate actions: Mergers, takeovers and share reorganisations can constitute involuntary disposals. Clients do not always realise that corporate actions can create a CGT event outside their direct control, and these are worth flagging in annual review conversations.

Strategic considerations: Paying CGT to stay on track

In some circumstances, deliberately realising a gain and paying CGT now can leave more capital working for the long term, by enabling proper rebalancing at a 24% rate rather than deferring a larger liability. For a higher or additional rate taxpayer, the CGT rate of 24% is still meaningfully lower than the 40% or 45% income tax rate that would apply if the same capital were converted to income.

For example, a higher or additional rate taxpayer who realises gains of £12,300, equivalent to the 2022/23 AEA, would pay CGT of approximately £2,232 on the £9,300 that exceeds the current £3,000 AEA. That relatively modest tax cost may be worthwhile to allow proper portfolio rebalancing and ensure the investment manager can actively manage the portfolio in line with the client's objectives.

• Utilising capital losses: As noted above in the reliefs section. Remember to report any losses to HMRC within four years to ensure they are available for future use.
• Transfers between spouses or civil partners: A highly effective planning tool involves transferring assets between spouses or civil partners. Such transfers are treated on a 'no gain/no loss' basis for CGT purposes, meaning no tax is due on the transfer itself. This allows couples to utilise both individual annual CGT allowances (totalling £6,000 for 2026/27) or to transfer assets to the partner with a lower income to potentially benefit from their basic rate CGT band upon a future sale.

The wrapper opportunity: Act before April 2027

Tax-efficient wrappers remain the single most effective tool for managing CGT exposure. Assets held within ISAs and pensions grow entirely free of CGT and income tax, removing the complexity and friction of the taxable portfolio environment altogether.

For 2026/27, the annual ISA subscription limit remains at £20,000. However, investors should be aware that this position changes from 6 April 2027, when the annual Cash ISA limit for those under 65 is reduced to £12,000 within the overall £20,000 limit. Investors aged 65 or over retain a Cash ISA limit of £20,000. The rules introduced to support this change also restrict transfers: from 6 April 2027, transfers from stocks and shares or Innovative Finance ISAs into cash ISAs will not be permitted. Transfers in the other direction remain allowed.

For those who hold significant cash within their ISA, 2026/27 is the last year in which the full £20,000 can be directed to a Cash ISA if the investor is under 65. That makes maximising the full ISA allowance this year particularly important for cash-led savers, and worth raising proactively in client conversations.

For couples, the combined ISA allowance of £40,000 per year provides a substantial CGT-free sheltering opportunity when used consistently over time.

The detailed anti-circumvention rules were confirmed by HMRC in June 2026, though the amending regulations are expected to be laid later in 2026 ahead of implementation.

Other CGT considerations

• Gifting assets: A gift to anyone other than a spouse, civil partner, or charity is treated as a disposal at market value for CGT purposes. The donor may therefore face a CGT liability even where no cash changes hands.
• Death and inheritance: No CGT arises on death. The person inheriting an asset is treated as acquiring it at its market value on the date of death. Any future gain is measured from that probate value rather than the original acquisition cost. Executors and personal representatives may be liable for CGT on gains arising during the administration period, though they are entitled to the full £3,000 AEA for the year of death and the two following years.

The importance of record keeping

Calculating CGT accurately depends on robust records of acquisition costs, disposal proceeds, and any enhancement expenditure. HMRC's same day and 30-day matching rules also mean that the order of share acquisitions and disposals matters when calculating gains on pooled holdings. Ensuring records are maintained from the point of acquisition, rather than retrospectively, makes the annual CGT calculation significantly more straightforward.

Looking ahead

The CGT environment for investors in 2026/27 reflects a regime that has fundamentally shifted over the past three years: lower allowances, higher rates, and a CGT landscape that now more closely mirrors income tax in its effective impact. For clients who have not reviewed their portfolio in the context of the current CGT regime, or who have yet to consider the April 2027 Cash ISA changes, there is a clear practical case for doing so before the year end.