How is Capital Gains Tax Calculated?

You only pay Capital Gains Tax (CGT) on the profit you make when selling or disposing of assets such as property, shares, or investments. Each tax year you get a tax-free allowance, called the annual exempt amount (CGT allowance). For the 2025/26 tax year, the allowance is £3,000.

That means you only pay CGT on gains above this allowance. For example:

• If your total gain is £15,000, you subtract the £3,000 allowance, leaving £12,000 taxable.
• CGT is then applied based on your income tax band and the type of asset sold.

Capital Gains Tax Rates 2025/26

Scottish taxpayers use the same CGT rates as the rest of the UK. Income tax bands in Scotland differ, but CGT is applied using the standard UK thresholds.

Note:

• You cannot carry forward any unused allowance to the next tax year.
• CGT applies only to gains above your allowance.
• Losses can be offset against gains to reduce your tax bill.

Example: If you sell a second home for £250,000, bought for £200,000, with £5,000 allowable costs, your gain is £45,000. Subtract £3,000 allowance = £42,000 taxable. As a higher-rate taxpayer, you’ll pay 24% = £10,080 CGT.

How the Capital Gains Tax Calculator Works

The Capital Gains Tax Calculator applies the latest UK CGT rules for the 2025/26 tax year to give you an accurate estimate of your liability.

Here’s how it works:

• Annual Exempt Amount: Each individual has a tax-free allowance of £3,000. You only pay CGT on gains above this threshold.
• CGT Rates for Investments (shares, crypto, funds):
  • 10% for basic rate taxpayers.
  • 20% for higher and additional rate taxpayers.
• CGT Rates for Residential Property:
  • 18% for basic rate taxpayers.
  • 24% for higher and additional rate taxpayers.

The calculator checks your taxable income and gain. Then it applies the correct rate 18/24% for property or 10/20% for other assets.

Rules & Thresholds for Capital Gains Tax UK  

When working out your Capital Gains Tax, it’s important to understand the key rules and thresholds that apply in the 2025/26 tax year:

• Personal Allowance: This applies only to income tax, not capital gains. CGT is calculated separately.
• Spouses and Civil Partners: Assets can be transferred tax-free, allowing couples to use both exemptions and reduce their overall bill.
• Annual Exempt Amount: Each person has a £3,000 allowance. Any gain above this is taxable.
• Losses: Capital losses can be used to offset gains in the same tax year or carried forward to future years.
• Private Residence Relief: If the property sold was your main home, you may not have to pay CGT.
• Reporting Requirement: CGT on residential property must be reported and paid within 60 days of completion using HMRC’s online system.

Why Use a Capital Gains Tax Calculator UK?

A CGT calculator makes planning much easier by giving you a quick and clear breakdown of your potential tax bill. Here’s why it’s useful:

• Plan your tax bill in advance: See what you owe before selling assets.
• Understand exemptions and reliefs: Check how your allowance and possible reliefs lower your liability.
• Compare different disposals: Calculate the difference between selling residential property and other assets.
• Avoid HMRC surprises: Get an early estimate so you’re prepared when it’s time to report and pay.

FAQS

What is Capital Gains Tax?

Capital Gains Tax (CGT) can be due when you sell or transfer an asset that has increased in value. The tax is applied to the profit (the gain) you make, not the total sale price of the asset.
You may need to pay CGT when:
Selling assets such as property, shares, investments, or crypto.
Transferring an asset to another person (other than your spouse or civil partner).
Moving an asset into a trust or passing it outside of your estate.
 

How is Capital Gains Tax calculated?

• CGT is calculated by:
  Working out your total gain (sale price – purchase price – allowable costs).
  Subtracting your annual exempt amount (£3,000 for 2025/26).
  Applying the correct CGT rate based on your income tax band and asset type.
  CGT rates for 2025/26:
  Investments (shares, crypto, funds): 10% (basic rate) or 20% (higher/additional rate).
  Residential property: 18% (basic rate) or 24% (higher/additional rate).

Do Scottish taxpayers pay different CGT rates?

      No. CGT rates are the same across the UK. Scottish taxpayers should use the standard UK income tax bands to determine whether they fall into the basic or higher rate.

How can I reduce my Capital Gains Tax bill?

•  There are several ways to reduce CGT legally:
  Use your allowances: Make use of the £3,000 CGT allowance each year.
  Move investments into tax-efficient accounts: ISAs and pensions (SIPPs) grow free of CGT. Be aware that moving investments may create a taxable gain in the transfer year.
  Use your spouse’s allowance:  Transfers between spouses/civil partners are tax-free, letting you both use allowances and lower tax bands.
• Offset losses: Report losses to reduce gains in the same year, or carry them forward to future years. You can claim unreported losses up to 4 years later.
• Adjust pension contributions: Reducing your taxable income can keep part of your gains in the basic rate CGT band.

Do I pay Capital Gains Tax on my main home?

Usually no. If your property qualifies for Private Residence Relief, you won’t pay CGT. However, second homes, buy-to-let properties, and overseas properties may be subject to CGT.

When do I need to report and pay Capital Gains Tax?

Residential property gains must be reported and paid to HMRC within 60 days of completion.

Other assets (shares, funds, crypto, etc.) are reported on your Self Assessment tax return for the following tax year. Some people may also use HMRC’s “real-time” CGT reporting service if eligible.

Can moving investments into an ISA or pension reduce CGT?

Yes. Investments held in an ISA or SIPP are free from Capital Gains Tax and UK dividend tax. Pensions also benefit from tax relief on contributions (subject to annual limits). Keep in mind that moving existing investments into these accounts may create a taxable gain in that year.

Can I carry forward unused CGT allowance?

No. If you don’t use your £3,000 CGT allowance in the 2025/26 tax year, it is lost. However, you can carry forward reported capital losses to offset against future gains.

Where can I get help with Capital Gains Tax?

You can:

• Read HMRC’s official Capital Gains Tax guidance.
• Speak to a qualified tax adviser or accountant for complex situations.
• Use tools like this Capital Gains Tax Calculator UK to estimate your bill before selling assets.