What Is the CGT Allowance?

The CGT allowance, properly called the annual exempt amount, is the slice of capital gains you can pocket each tax year before Capital Gains Tax bites. For 2026/27 it is just £3,000 per person. That sounds generous until you remember it was £12,300 as recently as 2022/23, before being cut to £6,000 and then halved again. The shrinking allowance is quietly pulling far more sellers into the CGT net.

How the Allowance Works

The allowance is applied after you have netted your gains against any allowable losses for the year. Only the amount above £3,000 is taxable. The rate then depends on which Income Tax band the gain falls into: 18% within your basic-rate band and 24% above it for most assets in 2026/27.

Critically, the allowance resets each 6 April and any unused portion vanishes. There is no carry-forward, unlike capital losses, which can be carried forward indefinitely once reported to HMRC. That asymmetry is the heart of CGT planning: you want to use your £3,000 every year you can.

A Worked Example for 2026/27

Imagine Priya wants to sell shares standing at a £10,000 gain. As a higher-rate taxpayer she would pay 24% CGT.

Selling all at once in 2026/27: Gain £10,000, minus the £3,000 allowance = £7,000 taxable. CGT at 24% = £1,680.

Spreading across two tax years: She sells half before 5 April 2026 (gain £5,000) and half after 6 April 2026 (gain £5,000). Each year she uses a fresh £3,000 allowance, so only £2,000 is taxable each year. CGT becomes £2,000 × 24% = £480 per year, totalling £960.

By straddling the tax-year boundary, Priya saves £720. If she instead transferred half the shares to her spouse first, both could use a £3,000 allowance in the same year, sheltering £6,000 of the gain and cutting the bill further. Our Capital Gains Tax calculator lets you model both routes.

Why Planning Matters More Than Ever

When the allowance was £12,300, a typical small share or property gain often fell entirely within it. At £3,000, that cushion is gone. Three tactics matter most:

• Use both spouses' allowances by transferring assets before sale (a no-gain, no-loss transfer).
• Bed and ISA: sell shares to use the allowance, then buy them back inside an ISA so future gains are tax-free.
• Time disposals so a large gain is split either side of 6 April.

For a full picture of how the gain itself is calculated and taxed, see our guide to Capital Gains Tax.

“A £3,000 allowance with no carry-forward turns CGT into an annual use-it-or-lose-it decision. The investors who win are the ones who harvest gains every single year.”

Related terms

• Capital Gains Tax: how gains are worked out and the rates that apply.
• Capital Gains Tax calculator: test single versus split disposals.
• TapTax blog: practical CGT planning guides for investors and landlords.

People also ask

Does the CGT allowance apply to each asset or to all gains together?

It applies to all your gains added together for the tax year, not to each asset separately. You total your net gains across shares, property, and other assets, then deduct a single £3,000 allowance from the combined figure.

Has the CGT allowance changed for 2026/27?

No. The annual exempt amount stays at £3,000 for 2026/27, the same as 2024/25. The big reductions happened earlier: from £12,300 in 2022/23 to £6,000 in 2023/24, and then to £3,000 from 2024/25 onwards.

Do I need to report gains if they are below the CGT allowance?

If your total gains are within the £3,000 allowance and you are not registered for Self Assessment, you usually do not need to report them. However, for residential property you may still need to report even where the tax is covered, and many people report small gains to record losses for carry-forward.