Capital Gains Tax Rates and Allowances for 2024/25 and 2025/26 – What You Need to Know

If you're planning to sell a property, shares, or other investments, it's essential to understand how Capital Gains Tax (CGT) could affect your returns. With the CGT allowance continuing to fall and changes in tax rates on the horizon, now is the time to prepare.

In this guide, the tax experts at MCC Partners walk you through the latest CGT rates, allowances, and the answers to common questions UK taxpayers are asking right now.

What Is Capital Gains Tax (CGT)?

Capital Gains Tax is a tax on the profit you make when you sell (or 'dispose of') an asset that has increased in value. It's the gain you make that's taxed, not the total amount you receive.

Common assets subject to CGT:

• Second homes or buy-to-let properties

• Shares (outside of ISAs)

• Business assets

• Personal possessions worth over £6,000 (excluding your car)

CGT Rates for 2025/26

Is Capital Gains Tax 18% or 24%?

The CGT rate depends on your income tax band and the type of asset:

CGT Allowance for 2024/25 and 2025/26

How Much Can I Earn Before Paying Capital Gains Tax in the UK?

Every individual gets a CGT tax-free allowance, also known as the Annual Exempt Amount (AEA). For 2024/25 and 2025/26, it's set at £3,000.

If your total gains in a tax year are under £3,000, you won't owe any CGT. If they’re over that, only the amount above the allowance is taxed.

Married couples and civil partners can combine allowances if the asset is jointly owned, potentially sheltering £6,000 of gains.

How to Work Out Your Capital Gains Tax

1. Work out your gain: Sale price – purchase price – allowable costs (e.g. legal fees)

2. Deduct your annual allowance: (£3,000 for 2024/25)

3. Apply the correct tax rate (based on asset type and your income band)

When Do You Pay Capital Gains Tax?

For UK property, CGT must be reported and paid within 60 days of completion.

For other assets, you report CGT as part of your Self Assessment tax return, due by 31 January following the tax year.

What Is the 7 Year Rule for Capital Gains Tax?

This rule actually applies to Inheritance Tax, not CGT. If you gift an asset and live for 7 more years, it falls outside your estate for Inheritance Tax purposes. However, Capital Gains Tax may still apply at the time of gifting.

How to Avoid Capital Gains Tax on UK Property

While you can’t avoid CGT entirely, you can reduce or eliminate it in some situations:

• Sell your main home (Principal Private Residence Relief)

• Offset capital losses from other assets

• Transfer assets to a spouse or civil partner tax-free

• Use your ISA and pension allowances to shelter gains

✅ MCC Tip: Selling strategically over multiple tax years may help reduce your overall liability.

Need Help With Your Capital Gains Tax Planning?

Navigating CGT can be complex – especially with shifting rates and allowances. At MCC Partners, we help individuals and business owners:

• Plan asset disposals efficiently

• Make use of all available tax reliefs

• Avoid unexpected CGT bills

Get in touch for personalised tax advice that protects your wealth and ensures full compliance.

Call: 01474 619 990 
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Website: www.mccpartners.co.uk