Overview
Capital Gains Tax applies to chargeable gains made by individuals, trustees and personal representatives on disposals of assets. The computation normally compares disposal consideration with allowable cost, applies incidental costs, losses, exemptions and reliefs, then allocates gains across the taxpayer’s rate bands. Residence, temporary non-residence and UK land rules can extend the charge.
Current calculation note: For 2026/27, the annual exempt amount is £3,000 for individuals and personal representatives and normally £1,500 for most trusts. Main CGT rates are generally 18% to the extent gains fall within the unused basic-rate band and 24% above it. Special rates and reliefs can apply to carried interest, qualifying business disposals and other assets.
Potential scope
Potentially relevant to estates, individuals, limited companies, local authorities, non resident landlords, property developers, sole traders. The practical scope must be tested against legal form, residence or establishment, source of income or gains, ownership, connected-party relationships, transaction date, accounting or tax period, and any devolved or local rules. Jurisdiction: United Kingdom. Territorial focus: United Kingdom, subject to residence, source, territorial and devolved-tax rules.
Review points
- Identify the legal trigger and person responsible for Capital Gains Tax.
- Fix the relevant tax year, accounting period, transaction date and jurisdiction before using a rate or threshold.
- Check registration, filing, payment, election and claim deadlines separately.
- Document exemptions, reliefs, connected-party rules and interactions with other taxes.
- Retain an evidence trail and complete source and technical review before production publication.
Rates, thresholds and calculation basis
For 2026/27, the annual exempt amount is £3,000 for individuals and personal representatives and normally £1,500 for most trusts. Main CGT rates are generally 18% to the extent gains fall within the unused basic-rate band and 24% above it. Special rates and reliefs can apply to carried interest, qualifying business disposals and other assets.
Registration requirements
Confirm whether Capital Gains Tax requires registration, a reference number, scheme approval or notification. Identify the trigger date and submit the registration through the correct authority or online service before the statutory deadline.
Filing and reporting
Identify the correct return, schedule, payroll report, customs declaration, trust/estate return, property return or standalone notification. Reconcile the filing to accounts and supporting computations, use the correct period and effective-date rules, and disclose claims, elections or uncertainties where required. Nil, relief-only or information returns may still be required even where no tax is payable.
Payment dates and deadlines
Most gains are reported through Self Assessment, while UK residential property and certain non-resident disposals can require a separate return and payment shortly after completion. Claims and loss notifications have statutory time limits.
Exemptions and reliefs
Review all exemptions, allowances, de minimis rules, group or spouse transfers, business/property reliefs, treaty positions and sector-specific reliefs relevant to Capital Gains Tax. A relief should not be assumed from commercial purpose alone; record the statutory condition and evidence for each claim.
Elections, claims and notifications
List every election, claim, clearance, certificate, status determination or notification that may alter Capital Gains Tax. Record whether it is made in a return or separately, who must make it, whether all affected parties must agree, the statutory time limit, whether it is revocable and the periods or assets it covers.
Records and evidence
Retain contracts, invoices, valuations, bank and ledger records, payroll or customs data, ownership evidence, residence information, calculations, returns, elections, correspondence and proof of payment relevant to Capital Gains Tax. Preserve the audit trail from source document to filed figure for at least the statutory retention period and longer where an enquiry, loss, relief or historic basis remains open.
Common errors and risks
Common risks include using the wrong period’s rate; confusing legal and beneficial ownership; overlooking connected persons or group rules; treating a relief as automatic; missing a separate notification; applying accounting treatment as if it were tax treatment; failing to reconcile figures; and retaining insufficient evidence. For Capital Gains Tax, also check interactions with the underlying taxes and any anti-avoidance provision.
Worked example
Illustrative workflow: a taxpayer identifies a transaction potentially within Capital Gains Tax. The adviser fixes the transaction date and taxpayer status, determines the statutory base, checks the current rate or relief conditions, prepares the computation, identifies the return and payment dates, links the official source and records the evidence. The numerical result is not final until the facts and effective-period rules have been independently reviewed.
Related subjects
Related collections: Investment Taxes, Property Taxes, Taxes Affecting Individuals. Search the platform for the underlying tax, relevant reliefs, withholding or reporting rules, anti-avoidance provisions and taxpayer type. Existing aliases: CGT, Capital Gains Tax (CGT).
Need a fact-specific answer?
Tax treatment depends on the exact facts, dates, documents and taxpayer status.
Ask Accountants4All