What are the Capital Gains Tax Rates in UK? 2026/27 Guide

The 2026/27 tax year brings full operational effect to the sweeping Capital Gains Tax (CGT) reforms initiated by the Finance Act 2025 and Finance Act 2026. Yes, practitioners advising clients on asset disposals must navigate a consolidated rate structure, heavily reduced allowances, and the phased erosion of traditional business reliefs.

To determine the correct CGT liability, you must establish the client’s taxable income, apply the correct legislative rates to the specific asset class, and deduct the frozen Annual Exempt Amount. So, explore everything about “What are the Capital Gains Tax rates in the UK” here.

The Annual Exempt Amount (AEA)

Before applying the tax rates, practitioners must deduct the Annual Exempt Amount (AEA). Under section 1K of the Taxation of Chargeable Gains Act 1992 (TCGA 1992), the government has permanently fixed the AEA at historically low levels.

“The annual exempt amount for a tax year is £3,000.”

For the 2026/27 tax year, the AEA is firmly capped at £3,000 for individuals and personal representatives.  For most trustees of settlements, the AEA is restricted to exactly half of the individual allowance, providing an exemption of just £1,500.  Moreover, the deduction of the AEA is strictly applied after deducting allowable losses accruing in the same tax year, but before deducting losses brought forward from previous years.

What are the Capital Gains Tax rates in the UK? Main Rates of CGT and Residential Property

Well, the Finance Act 2025 significantly simplified the CGT rate structure by removing the surcharge that previously applied to residential property. From 30 October 2024 onwards, the legislation applies a uniform rate structure across all standard asset classes, including second homes and buy-to-let properties.

Section 1H(3) of the TCGA 1992 establishes the main rates for individuals based on their available income tax basic rate band.  To calculate the applicable CGT rate, you must first determine the client’s income tax position. Section 2 of the Finance Act 2026 fixes the main income tax rates for 2026/27 at 20% (basic rate), 40% (higher rate), and 45% (additional rate).

• Lower Rate (18%): If a client’s total taxable income and gains fall within their basic rate band, their chargeable gains are taxed at 18%.
• Higher Rate (24%): Any portion of the chargeable gains that exceeds the unused basic rate band is taxed at the higher rate of 24%.

All in all, for personal representatives of a deceased individual, section 1H(6) of the TCGA 1992 dictates a flat CGT rate of 24% for all non-carried-interest gains.  Similarly, chargeable gains accruing to the trustees of a settlement attract a flat rate of 24%.

Business Asset Disposal Relief and Investors’ Relief

The most dramatic computational shifts in the 2026/27 tax year affect clients claiming Business Asset Disposal Relief (BADR) and Investors’ Relief (IR). Historically taxed at 10%, these reliefs have undergone a phased rate increase that culminates in the 2026/27 tax year.

Business Asset Disposal Relief (BADR)

BADR provides a lower rate of CGT on qualifying business disposals. However, section 8 of the Finance Act 2025 amended section 169N of the TCGA 1992 to increase this rate. For disposals made on or after 6 April 2026, the BADR rate increases to 18%.

Investors’ Relief (IR)

IR operates similarly for qualifying persons disposing of ordinary shares in unlisted trading companies under section 169VC of the TCGA 1992.  Following legislative changes, the lifetime limit for qualifying IR gains was drastically reduced to £1 million for disposals on or after 30 October 2024.  Furthermore, mirroring the BADR mechanics, section 9 of the Finance Act 2025 dictates that the IR rate increases to 18% for disposals made on or after 6 April 2026.

Because the 18% relief rate now perfectly aligns with the standard 18% basic rate of CGT, BADR and IR only provide a tangible tax advantage for clients whose combined income and gains exceed their basic rate band (preventing those excess gains from being taxed at 24%).

Carried Interest: The Shift to Income Tax

Practitioners advising fund managers face a complete systemic overhaul for carried interest from the 2026/27 tax year. Previously taxed under the CGT regime at bespoke rates (up to 32%), the taxation of carried interest shifts entirely to the Income Tax framework from 6 April 2026.

Now, carried interest is broadly taxed as trading profits under the Income Tax (Trading and Other Income) Act 2005 (ITTOIA 2005) and is subject to Class 4 National Insurance Contributions.  However, a unique multiplier applies for “qualifying” carried interest (determined by the average holding period). For qualifying carried interest, only 72.5% of the profits are treated as trading profits.  This inclusion rate is then taxed at the individual’s standard income tax rates (up to 45%), creating an effective blended rate that broadly mirrors top historic CGT rates while operating firmly within the ITTOIA 2005 mechanics. Let’s get a quick summary of what are the Capital Gains Tax rates in the UK below.

Summary of 2026/27 CGT Rates

Table: Capital Gains Tax Rates (2026/27)

Next steps for research: Review the specific anti-forestalling provisions that apply to unconditional contracts exchanged before 30 October 2024 but completed in the 2026/27 tax year. Additionally, examine the precise calculation mechanics for the 72.5% inclusion multiplier on carried interest to ensure accurate interaction with the £100,000 Adjusted Net Income threshold for personal allowance tapering.