Budget Capital Gains Tax Changes 2026
Budget CGT reforms increased key rates and changed reliefs for investors, property owners and business disposals.
Recent Budget Capital Gains Tax reforms have changed the tax charged on investment gains, qualifying business disposals and certain company ownership transfers. However, the changes began on different dates and did not increase every CGT rate at the same time.
The main rates for non-residential assets increased in October 2024, followed by staged increases for Business Asset Disposal Relief and Investors’ Relief. Budget 2025 later restricted the relief available when qualifying company shares are sold to an Employee Ownership Trust.
This guide focuses specifically on those Budget reforms and their current effect in 2026/27. It does not repeat the complete calculation rules for property disposals or every method of reducing CGT, which are covered by dedicated guides and calculators.
What Changed in the Budget?
The Budget increased the main CGT rates to 18% and 24%, raised the Business Asset Disposal Relief and Investors’ Relief rate in stages to 18%, and restricted relief on qualifying Employee Ownership Trust disposals.
Autumn Budget 2024 increased the lower main CGT rate from 10% to 18% and the higher main rate from 20% to 24%. According to the government’s Autumn Budget 2024 document, these rates apply to relevant disposals made on or after 30 October 2024. The change primarily affected gains on assets such as shares that were not already charged at residential-property rates.
The same Budget introduced staged increases for Business Asset Disposal Relief and Investors’ Relief. The qualifying rate increased from 10% to 14% on 6 April 2025 and then to 18% on 6 April 2026. The Investors’ Relief lifetime limit was also reduced to £1 million for qualifying disposals made on or after 30 October 2024.
Budget 2025 did not announce another general increase to the 18% and 24% main rates. Its most prominent direct CGT change concerned Employee Ownership Trusts. From 26 November 2025, 50% of a qualifying gain on shares disposed of to an Employee Ownership Trust is treated as chargeable, with the remaining 50% held over under the applicable rules.
| Budget reform | Previous treatment | New treatment | Effective date |
|---|---|---|---|
| Lower main CGT rate | 10% | 18% | 30 October 2024 |
| Higher main CGT rate | 20% | 24% | 30 October 2024 |
| Business Asset Disposal Relief | 10%, then 14% from April 2025 | 18% | 6 April 2026 |
| Investors’ Relief | 10%, then 14% from April 2025 | 18% | 6 April 2026 |
| Employee Ownership Trust disposal relief | 100% of a qualifying gain relieved at disposal | 50% chargeable and 50% held over | 26 November 2025 |
| Carried interest | Special CGT treatment | Revised Income Tax and National Insurance framework | 6 April 2026 |
These measures form part of the wider changes summarised in the latest UK tax changes guide. The disposal date is particularly important because different rates can apply on either side of a commencement date.
Who Is Affected by the CGT Budget Changes?
The main-rate increases primarily affect investors and shareholders, while the staged relief changes affect qualifying business owners, investors and certain Employee Ownership Trust transactions.
Individuals selling shares, funds, cryptocurrency, valuable personal possessions or other chargeable assets outside a tax-exempt wrapper can be affected by the 18% and 24% main rates. The actual rate depends partly on how much of the individual’s Income Tax basic-rate band remains available after taxable income is considered.
Business owners can be affected when selling all or part of a business or shares in a qualifying personal company. Even where Business Asset Disposal Relief applies, qualifying gains are now charged at 18% for disposals from 6 April 2026. Relief eligibility should be confirmed separately because owning or managing a business does not automatically satisfy every condition.
Property owners remain within the CGT system when disposing of second homes, buy-to-let properties or other property not fully covered by Private Residence Relief. However, the October 2024 main-rate increase did not raise the existing 18% and 24% residential-property rates. This distinction prevents the Budget announcement from being incorrectly presented as a new residential CGT increase.
Most people selling their only or main home continue to receive Private Residence Relief where all its conditions are satisfied. Partial business use, periods of absence, letting history or multiple residences can affect the available relief. The existing guide to tax when selling a home covers that narrower situation.
Current Capital Gains Tax Rates and Allowance
For 2026/27, individuals generally pay CGT at 18% within their available basic-rate band and 24% above it, with an annual exempt amount of £3,000.
| Gain or taxpayer | 2026/27 rate or allowance | Important condition |
|---|---|---|
| Individual within available basic-rate band | 18% | Taxable income and gains must be considered together |
| Individual above available basic-rate band | 24% | Only the relevant portion of the gain may fall at this rate |
| Business Asset Disposal Relief | 18% | Eligibility and lifetime-limit rules apply |
| Investors’ Relief | 18% | Qualifying share and investor conditions apply |
| Trustees and personal representatives | Generally 24% | Special rules and reliefs may alter the calculation |
| Individual annual exempt amount | £3,000 | Unused allowance cannot normally be carried forward |
| Annual exempt amount for most trustees | £1,500 | Trust and related-settlement rules can affect availability |
HMRC confirms the current annual exempt amounts and rates in its Capital Gains Tax rates and allowances. An individual does not simply select a rate based on their employment salary. Taxable income, available Income Tax bands, net gains, allowable losses and eligible reliefs must be calculated together.
The annual exempt amount covers net gains rather than sale proceeds. A person selling an asset for £50,000 does not automatically have a £50,000 taxable gain because the acquisition cost and qualifying incidental costs may be deductible. Use the Capital Gains Tax calculator to estimate a disposal using the relevant purchase price, sale proceeds and costs.
Property and Residential Gains
The Budget’s main-rate increase did not raise residential-property CGT rates, which remain generally 18% and 24% for individuals in 2026/27.
CGT may arise when an individual sells a buy-to-let property, second home or another property that is not fully protected by Private Residence Relief. The gain generally begins with the disposal proceeds and acquisition cost, with qualifying purchase, sale and capital-improvement costs considered under the relevant rules.
The October 2024 Budget change brought the lower and higher main rates for other assets into line with the existing residential rates. It did not add a separate CGT surcharge for landlords or second-home owners. Property gains can still interact with the individual’s taxable income when determining how much falls at 18% or 24%.
According to HMRC’s reporting guidance, UK residential-property gains requiring a return and payment must generally be reported within 60 days of completion. Non-UK residents have wider UK property-reporting requirements, including situations where no tax is payable.
The full property calculation and relief rules are already covered in the guide to reducing Capital Gains Tax on property. This Budget article does not duplicate those detailed property-planning steps.
Shares and Investments
Taxable gains on most shares and investments outside an exempt wrapper generally fall within the 18% and 24% main CGT rates after allowable losses, reliefs and the annual exemption.
According to GOV.UK guidance on selling shares, CGT can apply to shares held outside an ISA or qualifying employee share arrangement. Units in investment funds and certain other securities can also be chargeable. UK government gilts, qualifying corporate bonds and investments held within an ISA have different treatment.
An ISA protects eligible gains arising on investments held inside the account. Moving an existing investment into an ISA can require a disposal and repurchase unless a specific transfer rule applies, so an immediate CGT consequence can still arise. Certain shares acquired through qualifying SAYE or Share Incentive Plans can be transferred directly within the applicable conditions and deadlines.
The Budget 2025 Employee Ownership Trust reform is more specialised. According to HMRC’s EOT guidance, 50% of a qualifying gain is chargeable for disposals from 26 November 2025, while the remaining 50% is held over and can enter the trustees’ calculation on a later disposal.
How the Budget CGT Changes Affect Taxpayers
The reforms increase the tax cost of many non-property gains and qualifying business exits, while leaving the main residential-property rates and £3,000 annual exemption unchanged.
Investors making gains outside an ISA can face a larger liability than under the pre-30 October 2024 rates. The lower main rate rose by eight percentage points, while the higher main rate rose by four percentage points. The result depends on the gain remaining after costs, losses and allowances rather than the asset’s total sale value.
Business owners who expected a permanent 10% Business Asset Disposal Relief rate should update their exit forecasts. From April 2026, the qualifying rate matches the 18% lower main CGT rate. The relief can still matter because eligible gains do not become subject to the 24% higher main rate, but its value is narrower than under the former rate.
Property owners did not receive a new residential rate increase from the October 2024 reform. However, the £3,000 annual exempt amount remains significantly lower than historic levels, meaning smaller gains can produce a charge. Reporting within the correct deadline is also separate from calculating whether the sale qualifies for relief.
Anyone planning a substantial business or investment disposal should include CGT in the wider cash-flow forecast. The business tax planning guide explains how disposal tax can be considered alongside company, investment and succession decisions.
How to Reduce Capital Gains Tax Legally
CGT may be reduced legally by deducting allowable costs and losses, using available exemptions and claiming reliefs only where their detailed conditions are satisfied.
Allowable capital losses are normally deducted from gains arising in the same tax year. Unused reported losses from earlier years can then reduce remaining gains, although their use is subject to the CGT rules. According to HMRC guidance, a loss can generally be claimed up to four years after the end of the tax year in which the disposal occurred.
Transfers between spouses or civil partners who are living together are usually made on a no-gain, no-loss basis. This defers rather than removes the underlying gain because the recipient generally acquires the transferor’s historic cost. Separation, divorce, beneficial ownership and later disposal rules can change the result, so a transfer should not be made solely from a simplified online example.
Investments held inside an ISA can produce future gains free from CGT, while pensions provide a separate tax-advantaged investment environment. Neither wrapper automatically removes a gain that already exists outside it. Selling an investment to fund an ISA or pension can itself create a disposal.
Business Asset Disposal Relief, Investors’ Relief, Gift Hold-Over Relief, Rollover Relief and EIS or SEIS-related reliefs can apply in defined circumstances. Each has separate ownership, activity, investment, timing and claim conditions. The broader guide on paying less tax legally explains why the commercial and financial result should be considered alongside the headline tax reduction.
Common Capital Gains Tax Mistakes
Common mistakes include using the wrong rate date, treating sale proceeds as the gain, missing the property-reporting deadline and claiming relief without satisfying its conditions.
- Applying the pre-Budget 10% or 20% main rate to a disposal made after 29 October 2024.
- Using the former 14% Business Asset Disposal Relief rate for a disposal made from 6 April 2026.
- Assuming the main Budget rate increase also raised residential-property rates.
- Deducting ordinary repair or finance costs as capital-improvement expenditure without checking the rules.
- Forgetting to include incidental acquisition or disposal costs that may be allowable.
- Failing to report UK residential-property gains within the applicable 60-day period.
- Not reporting capital losses within the available claim period.
- Assuming an ISA contribution removes a gain that arose before the investment entered the ISA.
- Claiming Business Asset Disposal Relief without satisfying the ownership, employment or trading conditions.
- Using the sale price instead of calculating the actual gain.
CGT is generally self-assessed, so HMRC does not issue an automatic bill for every disposal. Taxpayers must determine whether a report is required, calculate the gain and pay by the appropriate deadline. Supporting purchase records, improvement invoices, legal fees, valuations and loss calculations should be retained.
This guide provides general information about Budget Capital Gains Tax changes and rates available as of 21 July 2026. CGT depends on the asset, disposal date, income, ownership, residence status, losses and available reliefs. Consult a qualified tax adviser for personalised advice and verify current rates and guidance on GOV.UK before making an investment, property or business-disposal decision.
Written by
Mia Carragher
Mia writes beginner-friendly UK tax and personal finance guides, with a focus on income tax, National Insurance, salary calculators and simple HMRC explainers.
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