Capital Gains Tax Allowance: UK 2025/26- What Investors Should Know

Introduction

If you have invested in shares, funds, cryptocurrency, second-hand assets, or property that you hold outside tax-wrapped vehicles like ISAs or pensions, you may have to pay Capital Gains Tax (CGT) when you dispose of those assets for more than you paid.

The annual tax-free allowance (called the Annual Exempt Amount, or AEA) for CGT in the UK is £3,000 for individuals and most personal representatives, and £1,500 for most trusts in the 2025/26 tax year. This represents a substantial reduction from previous years (for example, £12,300 in 2022/23 and £6,000 in 2023/24). :contentReference[oaicite:12]{index=12}

This decrease only heightens the necessity for a better understanding of gains management, loss usage, and proper document-keeping.

In this guide we:

Explain how the allowance works and what the CGT rates are for 2025/26.
Outline how tax-loss harvesting and gain harvesting strategies work (and where they may not).
Give practical examples.
Show what records you need and when you'll have to report to HM Revenue & Customs (HMRC).

By the end, you should have a good idea about how to go about CGT in 2025/26. Please be reminded that this is general material and you should always consider your own tax position or receive specific advice on CGT.

What Is the CGT Allowance for 2025/26?

An AEA is what CGT allowance generally refers to. This is an upper limit on your chargeable gains in a tax year that exempts you from the CGT.

Current allowances for 2025/26

£3,000 for most individuals (and most personal representatives or trustees of disabled people). :contentReference[oaicite:14]{index=14}
£1,500 for most of the other trusts. :contentReference[oaicite:15]{index=15}

The allowance is very low in comparison to those in previous times— for example, £12,300 for individuals in 2020/21—so any form of gains may call for a CGT payment.

When Does CGT Apply?

CGT becomes due upon the disposal of an asset outside tax-wrappers. A disposal includes:

dealings in shares, funds, cryptocurrency, and other investments
gifts of assets (except to a spouse or civil partner)
swapping or exchanging assets
compensation from the loss or destruction of an asset

You are to pay tax only on the profit (sale price - allowable costs - purchase price). If your total gain in a year is less than or equal your AEA, you pay no CGT. :referenceContent[oaicite:16]{index=16}

Once over the limit, whichever part of the gain is charged to CGT hinges on your overall income to be taxed, and its type.

What are the CGT rates for 2025/26?

For the 2025/26 tax year, most chargeable gains above your AEA are taxed at:

18% for the part of your gains that falls within your remaining basic rate income tax band. :referenceContent[oaicite:17]{index=17}
24% for gains falling in the higher or additional rate bands. :referenceContent[oaicite:18]{index=18}

Some gains attract specific rates or conditions – for example, Business Asset Disposal Relief (BADR) is taxed at 14% on qualifying gains (up to the lifetime limit), while certain carried interest gains are taxed at around 32%. Always check the detailed rules for your particular situation.

Loss Harvesting – How It Works

A situation that arises when stocks or assets lose value and the asset is sold at a loss in an attempt to create equal gains for tax purposes.

Timestamps

When gains realised within the current year cross the allowance limit of £3,000, leading to anxiety concerning CGT liability soon.
When you plan to rebalance your portfolio for other reasons and would not counter the disposal of a loss-making investment.
When you anticipate gains in several future years and want to carry any losses forward.

Dodging the bottom lines

Losses must be realised (i.e., you must sell or dispose)—paper losses don't count (when you merely mark down value).
If the loss is reported, then the HMRC must include it in a Self Assessment Tax Return, or if no Self Assessment Return is filed, it must be reported to HMRC in writing. Further, if no action is taken within 4 years of the end of the tax year, the loss cannot be carried forward:contentReference[oaicite:19]{index=19}

If reported, unused losses can be carried forward indefinitely and, to such an extent, be offset against future gains of the same nature. :contentReference[oaicite:20]{index=20}

-A ``bed and breakfast” / share-matching condition comes into play regarding shares. If you sell shares and buy th ese same class of shares, in the same company, within 30 days, special matching rules apply. This may mean that your loss will be limited or disallowed for tax-loss harvesting purposes. :contentReference[oaicite:21]{index=21}

Example

Or else, If you have a taxable gain of 4000 sterling pounds in Fund A, with loss of 3000 sterling pounds in Fund B happening in the same tax year.

No harvesting: Gain of 4000 pounds minus the 3000 pounds allowance → Taxable gain of 1000 pounds (at CGT rates).
With harvesting: You realize a loss of 3000 pounds, making a net gain of 1000 pounds, with the allowance of 3000 pounds totally canceling all that out ⇒ no CGT!

If you feel you want some exposure to the sector Fund B invests in, then you can try and buy a fund somewhat similar and not identical to Fund B—You don't want to fall under the 30-day rule, which will limit you selling the identical set of shares.

Harvesting Profits: The Intent Behind Your Allowance

Profit Harvesting is the analytical technique of strategically cashing out a gain that is small enough to fit within your £3,000 capital gains allowance for the year, resetting the cost basis for a future sale without triggering CGT now.

The major reasons behind harvesting profits are as follows:

To use up your £3,000 annual exempt amount before the end of the tax year.
To reset the cost basis of the holding by selling and rebuying to limit future taxable gains.
To dispose of long-term holdings on which the embedded gains are quite high, while it is believed that the allowance might still be low or that the rates of CGT will go up in the future.

When Gain Harvesting might not be such a hot idea

Something that affects other tax liabilities probably includes the spreading out of the CGT liabilities in, for instance, IHT planning, or pension lifetime allowances.
There is an irrational fear that when one sells and later buys back or waits 30 days, there might happen a significant upward movement in the market that would have been missed.
The selling might result in your income crossing a band, and part of your gain would be taxed at one rate above half of your pre-CGT gain.
Costs of transactions, bid-ask spreads, or reinvestment-related issues may also detract from the strategy's efficiency.

Example

If you own shares that have an embedded gain of £2,800 and no other gains or losses for the year.

A sale would add to a gain of £2,800 < £3,000 allowance → no CGT payable.
If, after 30 days, he opts to buy the shares anew, their base cost becomes [sale price = repurchase price], and, hence, any future gain is from a higher point on the cost that may in due course save on CGT.

NB: Some matching rules (for shares) may apply, and one must consider market risk, keeping in mind the cost, as well as general tax treatment.

What Records Should UK Investors Keep?

Having the right records is vital when it comes to calculating gains or losses so that you can hold your stance against HMRC investigations.

You should keep:

Purchase date and cost (including fees, commissions, stamp duty where applicable)
Sale date and proceeds (again net of costs)
Broker statements or equivalent transaction receipts
Details of any corporate actions that may affect cost basis (split, rights issue, reorganisation)
Records of losses you intend to carry forward
Any correspondence or claims relating to negligible value assets

How long to keep them?

As a rule of thumb, if you complete a Self Assessment tax return you should keep your CGT records for at least 5 years after the 31 January deadline following the end of the tax year. If you do not need to send a return, keep records for at least 22 months after the end of the tax year. For some assets (such as property or overseas assets), it is sensible to keep records for longer in case questions arise later.

Reporting and paying Capital Gains Tax (CGT)

Taxable gains are normally reported on your Self Assessment tax return, which is due by 31 January after the end of the tax year.
For many disposals of UK residential property, UK residents must report and pay any CGT using HMRC’s online Capital Gains Tax on UK property service, usually within 60 days of completion. :contentReference[oaicite:22]{index=22}
Always check the latest HMRC guidance for current regulations and deadlines, as rules can change over time.

Common Mistakes to Avoid

Frequent small sales: Several small gains that are each considered to be trivial may in total prove to be more than the annual exempt amount of £3,000.
Disregarding losses: If there are losses available that you have not been carrying forward from an earlier year, use them (and make sure they have been claimed properly).
Mixing assets in an ISA/pension with those in a general brokerage account: Growth inside an ISA/pension is CGT-free. Growth outside, while utilizing your CGT allowance, would be taxed.
Misunderstanding 30-day/share matching: Buying the same class of shares in the same company within 30 days might lead to unintended matching loss and lost sustainable gains.
Thinking allowance carry-over is permissible: It is not'; so if you fail to use the £3,000 allowance in a year, this part of the allowance becomes nil.
Not considering transaction costs or market timing when rebuying assets — these can erode the benefit of “gain harvesting”.

Conclusion

In the 2025/26 tax year, the CGT allowance for individuals will be £3,000 (trusts/estates £1,500 initiative). Lower allowances, coupled with higher CGT rates (18%/24% for most chargeable gains above the allowance), suggest that more investors might face CGT than in years gone by.

Better-planned carried-forward losses, tax-loss harvesting, and gain harvesting where applicable will take the sting out of your CGT bill. Allez-au-usual souvent. What is still an absolute must is good record-keeping as well as timely reporting.

Note: Capital gains tax is just one side of tax relief amongst a broader array of tax considerations for you. Your income tax band, other reliefs that are applicable to you, the "wrapper" (ISAs, pensions) your investments come inside of, and a careful analysis of your investment strategy all come into play. Potential taxpayers not well-informed in this area should seek advice from professional taxation.

If you are still a little uneasy about the taxation impacting your total income, our [salary calculator] should give you a quick view of how the tax affects the rest of your investment planning.