As the UK tax landscape continues to evolve, one of the most significant changes affecting individuals in the 2025/26 tax year is the reduction in the Annual Exempt Amount (AEA) for Capital Gains Tax (CGT). Alongside this, adjustments in CGT rates and thresholds mean that taxpayers must review their investment and disposal strategies to minimise liabilities and make informed financial decisions.
This article explains the new Capital Gains Tax rules for 2025/26, their impact on individuals, investors, and business owners, and how professional tax planning can help.
1. What Has Changed for CGT in the 2025/26 Tax Year?
Annual Exempt Amount (CGT Allowance)
From 6 April 2025, the annual exempt amount for individuals will be £3,000. For most trusts, the exemption will be £1,500. This is a further reduction from £6,000 in 2023/24 and £12,300 in 2022/23.
This continued decrease means that more people will now fall within the CGT net, and even modest gains could lead to tax liabilities.
CGT Rates for 2025/26
The main Capital Gains Tax rates for individuals are:
- 18% for gains falling within the basic rate income tax band
- 24% for gains above the basic rate income tax band
- 24% for most trusts and personal representatives
These rates apply to chargeable gains after deducting the annual exemption.
How the Allowance and Rates Interact
Once your gains exceed the £3,000 exemption, the taxable gain is added to your income. Depending on your total income and gains, you’ll pay CGT at either 18% or 24%. This interplay between income and capital gains means timing and planning are critical.
2. Why the Changes Matter
Reduced Tax-Free Threshold
A lower allowance means fewer gains can be realised tax-free. Many investors who previously avoided CGT on small disposals will now have to report and pay tax on even moderate gains.
Higher Likelihood of Entering a Higher Tax Band
Adding capital gains to your income could push you into the higher rate band, resulting in part of your gain being taxed at 24% instead of 18%.
Strategic Timing of Disposals
With a smaller allowance, deciding when to sell or transfer assets is crucial. Realising gains in a year with lower income or spreading disposals across multiple tax years can reduce your CGT exposure.
Encouragement for Tax-Efficient Investing
These changes make it more attractive to use tax-efficient vehicles such as ISAs and pensions, where gains are exempt from CGT altogether.
3. Who Is Most Affected by the New CGT Rules?
Individual Investors
Anyone selling shares, cryptocurrency, or property (that is not their main residence) is affected. With the new £3,000 exemption, even moderate gains will be taxable.
For example, selling shares with a £15,000 gain will now leave £12,000 subject to CGT after applying the £3,000 allowance.
Property Owners
Buy-to-let investors and second-home owners are likely to face higher tax bills. The lower allowance means that even small appreciation in property value can trigger CGT.
Business Owners and Entrepreneurs
If you plan to sell shares in your company or dispose of business assets, the reduced allowance can significantly affect your net proceeds. Reliefs such as Business Asset Disposal Relief (BADR) are still available but need to be strategically applied.
Trustees and Estates
Trustees and personal representatives face an even lower allowance of £1,500 and a 24% tax rate, making proactive management and record-keeping essential.
4. Practical Examples
Example 1: Basic Rate Taxpayer
- Income: £20,000
- Gain on shares: £12,600
- Less annual exemption: £3,000
- Taxable gain: £9,600
Since your total income and gain (£29,600) are within the basic rate band, the entire gain is taxed at 18%, resulting in £1,728 CGT due.
Example 2: Higher Rate Taxpayer
- Income: £40,000
- Gain on shares: £52,600
- Less annual exemption: £3,000
- Taxable gain: £49,600
Your total income and gains (£89,600) place part of your gains in the higher rate band. The first £17,700 (within the basic band) is taxed at 18%, and the remaining £31,900 at 24%, resulting in £10,842 CGT payable.
These examples show how even modest gains can lead to significant tax bills under the reduced allowance.
5. Key Tax Planning Tips for 2025/26
1. Review Your Asset Disposal Strategy
Consider spreading disposals over multiple tax years to maximise use of the £3,000 allowance each year.
2. Use Tax-Efficient Wrappers
Invest in ISAs, pensions (such as SIPPs), or other tax-protected accounts where gains are entirely exempt from CGT.
3. Offset Capital Losses
Use capital losses to reduce taxable gains. Record and report your losses to HMRC promptly so they can be carried forward.
4. Manage Income and Gains Together
Since CGT rates depend on your total income, plan disposals for years when your income is lower to stay within the basic rate band.
5. Utilise Spousal Transfers
Transfers between spouses or civil partners are exempt from CGT, allowing both partners to use their individual £3,000 exemptions.
6. Consider Timing for Property Sales
If selling a second home, plan the timing carefully to ensure the most favourable tax outcome, especially if your income or other disposals fluctuate year to year.
7. Get Professional Advice Early
The new thresholds make proactive tax planning essential. Working with ABM Chartered Accountants ensures your gains, losses, and investment strategies are optimised under the new rules.
6. Wider Implications of the CGT Changes
A Tougher Environment for Investors
The lower allowance means more taxpayers are now subject to CGT. Many investors will need to file self-assessment returns for the first time, increasing the administrative burden.
Encouragement for Long-Term Planning
The government’s approach signals a push for individuals to manage their finances more proactively rather than rely on generous allowances.
Impact on Investment Behaviour
The reduced threshold may cause investors to hold onto assets longer, reducing overall market liquidity. However, it also encourages smarter, long-term investment strategies.
Business Exit Considerations
Entrepreneurs considering business sales or share disposals must plan carefully. Reliefs like Business Asset Disposal Relief (BADR) can reduce CGT to 10%, but eligibility conditions must be met well in advance.
7. How ABM Chartered Accountants Can Help
At ABM Chartered Accountants, we specialise in helping UK taxpayers navigate complex changes like the 2025/26 Capital Gains Tax rules. Our expert tax advisors provide strategic, forward-thinking guidance to help you reduce liabilities and make informed decisions.
Our CGT advisory services include:
- Comprehensive review of your investment portfolio and potential gains
- Calculation and forecasting of CGT liabilities under the 2025/26 rules
- Optimisation of tax reliefs and exemptions, including spousal transfers
- Strategic planning for property and business disposals
- Capital loss harvesting and reporting support
- Ongoing compliance and HMRC reporting assistance
We help individuals, investors, landlords, and business owners build tailored tax strategies that protect wealth and improve after-tax returns.
8. Summary and Next Steps
The 2025/26 Capital Gains Tax changes represent a major shift in how gains are taxed in the UK. With the allowance reduced to £3,000 and rates of up to 24%, more taxpayers will find themselves paying CGT than ever before.
Key Takeaways:
- The CGT allowance has fallen sharply, exposing more gains to tax.
- Timing of disposals and income management is now crucial.
- Using tax wrappers and professional advice can minimise liabilities.
- Planning early ensures compliance and efficiency.
If you are planning to sell property, shares, or a business, or simply want to review your exposure to CGT, our experts at ABM Chartered Accountants are here to help. We provide strategic tax planning designed around your unique circumstances and financial goals.
📞 Contact ABM Chartered Accountants today to book a consultation and plan your Capital Gains Tax strategy for 2025/26.
