CGT allowances — officially known as the Capital Gains Tax annual exempt amount — let you make a certain level of gains each tax year before paying CGT. For the 2025/26 tax year, individuals can realise up to £3,000 and most trusts up to £1,500 tax-free. Using your CGT allowance strategically each year helps reduce your overall Capital Gains Tax bill when selling property, shares, or other investments.
When you dispose of an asset (for example shares, a second home or a business), you may trigger Capital Gains Tax (CGT). In this process, CGT allowances (also known as the annual exempt amount) play a central role – because they determine how much of your gain is tax-free before tax is calculated. For the tax year 2025/26 the allowance stands at £3,000 for individuals and £1,500 for most trusts.
Why this matters: a lower allowance means you may face tax on gains that previously would have been fully exempt. By understanding CGT allowances, you can plan disposals, allocate assets and mitigate tax ahead of time.
Get in touch with Naail & Co today to book a free initial consultation and see how CGT allowances affect your situation.
Here are the headline figures for CGT allowances in the UK for 2025/26:
Individuals (and personal representatives/trustees for disabled persons): £3,000.
Most trustees (other than those for disabled persons): £1,500.
Important points:
Unused CGT allowances cannot be carried forward or transferred to another person.
The allowance applies across all your gains in the tax year, before reliefs and losses are applied. (Essentially you deduct the allowance from your total net gain; tax is then calculated on the remainder.)
Recent changes: The allowance was £12,300 in 2022/23, then reduced to £6,000 in 2023/24 and now £3,000 from 2024/25 onwards.
As a result, many more individuals now face CGT who previously did not.
Speak with Naail & Co to model your potential gains using the latest CGT allowances and plan ahead.
It’s vital to understand the distinction between allowances and reliefs:
A CGT allowance (annual exempt amount) is the tax-free threshold you can use each year.
A CGT relief is a measure that reduces or defers the taxable gain (for example: Private Residence Relief (PRR), Business Asset Disposal Relief (BADR), hold-over relief, etc.).
The allowance is applied first, then reliefs and losses are considered to reduce the gain still subject to tax. It’s important when planning asset disposals to look at both: “How much can I exempt via allowance?” and “Which reliefs might I qualify for?”
Using the correct terms helps when discussing with your accountant or tax advisor and ensures no confusion when reviewing your position with Naail & Co.
Here’s how CGT allowances work in practice alongside CGT rates:
Calculate the total gain from disposals, subtract allowable costs and losses.
Deduct the CGT allowance (£3,000 for individuals) from the net gain.
The remainder is added to your taxable income and taxed at the applicable CGT rate.
For the tax year 2025/26:
Basic-rate taxpayers: 18% on gains (for assets other than carried interest) from 6 April 2025.
Higher-rate taxpayers: 24% on gains.
Trustees and personal representatives may face higher rates in certain cases (e.g., 24 % for trusts disposing of assets) – see HMRC guidance.
Example: If your taxable income is £20,000 and you have a net gain of £12,600: subtract the £3,000 allowance → £9,600 remains. Add to income (£29,600) which is under the basic-rate band → CGT at 18% → tax of £1,728.
Ask Naail & Co to help you calculate your potential tax bill using the current CGT allowances and rates — don’t wait until after you’ve sold.
You can make better use of CGT allowances by thinking about timing and asset ownership within your family or partnership structure. Key strategies include:
Spouse or civil partner transfers: Transfers between spouses/civil partners are generally on a no-gain/no-loss basis. This means the receiving spouse gets the asset at the same base cost. It allows both partners to use their individual allowances (£3,000 each).
Timing of disposals: Because the allowance cannot be carried forward, spreading asset disposal across tax years might allow you to use multiple allowances (for example dispose partially this year, partially next).
Matching gains with partner’s lower income bracket: If one spouse is in the lower tax band, transferring the asset then selling from their name may result in more favourable CGT rates.
These kinds of planning opportunities can make a meaningful difference in your tax liability.
Contact Naail & Co now to explore family and partner-transfer strategies to maximise your CGT allowances and minimise risk.
If you own property (other than your main residence) such as a second home or a buy-to-let, then CGT allowances remain highly relevant. At the same time you need to consider the interplay with reliefs like PRR. Key points:
When selling a property that’s not your main home, you still apply the CGT allowance (£3,000) to the gain after costs and losses.
If the property was your main residence for part of the time, you may benefit from PRR which can exempt some or all of the gain. After applying any PRR you still deduct the allowance.
It’s important to document costs (purchase price, allowable improvement costs, solicitor/estate agent fees) as these reduce the gain. HMRC guidance confirms allowable costs and the rule that unused allowance cannot be carried forward. (Low Incomes Tax Reform Group)
Schedule a property CGT review with Naail & Co — let us assess your residence status, improvement costs and CGT allowance usage to minimise tax when you sell.
Investors in railway funds, shares or digital assets (cryptocurrencies) must pay attention to CGT allowances because:
Gains from disposals of shares, funds and crypto (outside tax-wrappers) count towards your annual exempt amount.
Losses on other assets can offset gains, improving the effect of your allowance (for example bringing a gain below the £3,000 threshold). (MHA)
Assets held within tax-wrappers (e.g., ISAs or pensions) are outside CGT altogether – so using your allowance on unwrapped assets is critical. (Interactive Investor)
Ask Naail & Co to design a disposal and loss-offset schedule around your CGT allowances so you extract better value when you sell or restructure your investments.
Certain types of assets receive special treatment alongside CGT allowances:
Chattels exemption: For personal possessions sold for £6,000 or less, the gain may be exempt and the allowance may not even apply. (Royal London for advisers)
Wasting assets: These are assets with predictable useful lives of 50 years or less (for example certain business assets) and may qualify for full exemption depending on usage. (GOV.UK)
In each case, after determining whether the exemption or relief applies, the CGT allowance still forms part of your broader planning.
If you hold unusual assets (antiques, classic cars, business plant) speak to Naail & Co about how CGT allowances and exemptions apply in your case.
Trusts and estates must pay particular attention to CGT allowances because the threshold is lower and the rules more complex. Key facts:
Most trusts get an annual exempt amount of £1,500 for tax years 2025/26. (GOV.UK)
Trustees for disabled persons may qualify for the higher individual allowance (£3,000). (GOV.UK)
Personal representatives (executors) of someone who has died may use the allowance for the tax year of death and the following two years while in the administration period. (GOV.UK)
Planning tip: Aligning disposal timing and reviewing the structure of trusts can preserve more of the CGT allowance and reduce tax.
Let Naail & Co’s private-client team conduct a trust and estate CGT allowances review for you.
Using the CGT allowance is essential—but equally important are reliefs which stand in addition. These include:
Business Asset Disposal Relief (BADR): For qualifying business disposals, gains may be taxed at a much lower rate (14% from 6 April 2025) rather than the standard CGT rate. (GOV.UK)
Hold-over relief: Used when you give away an asset or sell it at a discount, deferring the charge until later.
EIS / SEIS deferral relief: Laws exist for start-up investment zones where gains can be deferred if reinvested.
When combined with a CGT allowance strategy (timing, transfers, losses), reliefs make a huge difference in your overall tax position.
Before you dispose of a business, shares or significant asset, speak with Naail & Co to review reliefs, elections and how to align them with CGT allowances.
Having utilised your CGT allowance, you may still need to report and pay tax. It’s critical to meet HMRC’s deadlines. Key points:
If your gains (after allowance and losses) exceed the allowance, or you have gains on UK residential property, you must report them via Self Assessment or the 60-day property regime. (Crowe)
The tax year runs 6 April to 5 April. Mis-timing a disposal can cost you an additional year’s allowance.
Penalties apply for late reporting. The low allowance means more individuals are now in scope of CGT and hence reporting.
Contact Naail & Co now so we can prepare and file your CGT returns, apply your allowance correctly and meet deadlines with peace of mind.
Even with a clear allowance, taxpayers fall into avoidable traps. Here are the frequent ones:
Making a large disposal and failing to realise any gain until it pushes you into a higher tax rate.
Forgetting that the allowance cannot be carried forward so “waiting” may cost you the benefit.
Neglecting spouse/civil partner transfers in pre-sale planning, thereby losing the opportunity to use two allowances.
Ignoring losses or reliefs when they could reduce your taxable gain and improve the allowance’s effectiveness.
Improperly documenting costs (improvements, purchase/sale fees) which reduce the gain before the allowance is applied.
Let Naail & Co perform a CGT allowances health-check for your assets, identify lost opportunities and fix gaps ahead of your next disposal.
Scenario A: Shares disposal
You sell shares for a net gain of £9,000. You have no other gains in the year.
Deduct CGT allowance £3,000 → taxable gain £6,000.
If you are basic-rate taxpayer, you pay 18% on the £6,000 → tax £1,080.
Scenario B: Second home sale
You sell a second home, net gain £120,000 after costs and PRR.
Deduct allowance £3,000 → taxable gain £117,000.
Part taxed at 18% (within basic band) and part at 24% (higher-rate) – exact split depends on income. (See example in HMRC guide.) (GOV.UK)
Scenario C: Spousal planning
You and your spouse each have a gain of £20,000 on separate assets. You each use your allowance (£3,000 each) → £17,000 taxable each → two smaller liabilities rather than one large one.
Get in touch with Naail & Co to book a free initial consultation. We will walk you through your personal scenario and show how CGT allowances apply in your case.
At Naail & Co, we understand CGT allowances are just one piece of your broader tax-planning puzzle. Our service covers:
Discovery session: identify all your assets, potential gains and disposal plans.
Records review: purchase cost, improvement expenditure, past reliefs, existing allowances.
Scenario modelling: timing, spouse transfers, use of allowance, choice of reliefs.
Execution: advising on disposal strategy, submission of Self Assessment, dealing with HMRC correspondence.
By working with us you ensure you are not overlooked, you maximise your CGT allowances and you minimise your tax risk.
Book your free initial consultation with Naail & Co today and let us help you take full advantage of CGT allowances — before the next disposal.
CGT allowances, officially known as the Capital Gains Tax annual exempt amount, let you earn a certain level of capital gains each tax year before paying any CGT. For 2025/26, individuals can realise up to £3,000 tax-free and most trusts up to £1,500. After this allowance, gains are taxed at your applicable CGT rate depending on income and asset type.
For the 2025/26 tax year, the CGT allowance is £3,000 per individual and £1,500 for most trusts. Trustees for disabled persons and personal representatives may qualify for the higher £3,000 figure. These allowances apply to total gains across all assets in the year — not per asset.
Yes. The CGT allowance has been significantly reduced in recent years — from £12,300 (2022/23) to £6,000 (2023/24), and now £3,000 from 2024/25 onwards. This means more individuals will need to report and pay CGT, making proactive planning with an accountant essential.
No — unused CGT allowances cannot be carried forward or transferred to another person. If you don’t use it in the current tax year, it’s lost. That’s why it’s smart to plan disposals strategically before 5 April each year to make full use of your annual exemption.
Transfers between spouses and civil partners are no-gain, no-loss transactions, meaning no CGT is due at the point of transfer. This allows couples to share ownership of assets and utilise two CGT allowances (£3,000 each), potentially doubling their tax-free gains. Naail & Co can advise how to structure transfers efficiently before selling.
Yes. When selling a second home, buy-to-let or investment property, CGT allowances apply to the taxable gain after allowable costs and reliefs such as Private Residence Relief (PRR). The first £3,000 of net gains is exempt for individuals, and the rest is taxed at the relevant property CGT rate.
Your CGT allowance is a fixed, tax-free threshold available to everyone, while CGT reliefs (like BADR, PRR, or hold-over relief) depend on qualifying conditions. Reliefs can reduce or defer the taxable gain, while the allowance simply exempts a set amount each year. Both should be used together for optimal tax efficiency.
Gains from shares, investment funds, and cryptocurrencies all fall within the scope of CGT allowances. Any gains beyond the £3,000 annual exempt amount are taxable. Using loss harvesting or timing disposals across tax years can help investors stay within their allowance and reduce their overall CGT bill.
For most trusts, the CGT allowance is £1,500 per tax year, while disabled-person trusts and personal representatives may use the higher £3,000 limit. Trustees often face more complex CGT rules and higher tax rates, so tailored professional advice is essential. Naail & Co’s trust specialists can guide you through the process.
Business owners can combine their CGT allowance with Business Asset Disposal Relief (BADR) for major tax savings. From 6 April 2025, BADR will tax qualifying business gains at 14%, compared with the standard CGT rate. Using both reliefs together can significantly lower your tax when selling or retiring from your business.
Typical mistakes include missing the 5 April deadline to use the allowance, failing to transfer assets to a spouse before sale, forgetting to offset losses, and confusing the CGT allowance with other income tax allowances. Keeping detailed records and consulting Naail & Co helps you avoid these errors and make the most of every exemption.
Naail & Co Chartered Certified Accountants & Tax Advisors specialise in CGT planning. We help individuals, property owners, and business sellers:
Optimise timing of disposals to use annual allowances effectively
Structure transfers between spouses and family members
Apply relevant CGT reliefs (BADR, PRR, EIS, etc.)
File accurate returns within HMRC deadlines
Book your free initial consultation today to discover how our experts can minimise your CGT liability while keeping you fully compliant.
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