How Much Is the Capital Gains Tax Allowance This Year

At Towerstone, we provide specialist capital gains accountancy services for people planning disposals. We have written this article to explain the current Capital Gains Tax allowance and how it applies, helping you make informed decisions.

Understanding the capital gains tax allowance is one of the most common concerns I hear from clients and in my opinion it is one of the most powerful tools you have to reduce your tax bill legitimately. Capital gains tax is all about profits from selling or disposing of assets, but the allowance gives you a buffer, a threshold below which you pay no tax at all. Yet so many people either do not know the current amount or misunderstand how it works in practice.

From experience, knowing the allowance is the first step. Understanding how to use it is where real planning begins.

In this article I will explain:

How much the capital gains tax allowance is for this year

What it covers and what it does not

How it interacts with different assets

Who gets the allowance

How you can make the most of it

Common pitfalls and strategies from experience

Let’s start with the headline.

The Capital Gains Tax Allowance This Tax Year

For the tax year 2025 to 2026:

The capital gains tax annual exempt amount is £6,000 per individual.

This means that:

You can realise up to £6,000 of gains in this tax year before any capital gains tax becomes payable

This applies to your total gains across all assets, not £6,000 per asset

If you are married or in a civil partnership and jointly own assets, this allowance can effectively shelter up to £12,000 of gains before tax

It is important to note that this is a per person allowance.

This figure was reduced from £12,300 in recent years, and in my opinion this reduction has created opportunities for more careful planning rather than simply leaving gains to accumulate randomly.

From experience, people often assume the allowance resets asset by asset. It does not. It applies across the whole of your disposals in the tax year.

What Counts as a Capital Gain

Before we go deeper, let’s clarify what counts as a capital gain.

Capital gains arise when you dispose of an asset and make a profit, for example when you:

Sell shares or investments

Sell a second home or buy-to-let property

Sell crypto assets

Sell a business asset

Gift an asset to someone other than your spouse or civil partner

Part with ownership in a way that counts as a disposal

The gain is broadly the difference between what you received and what you paid (plus allowable costs), but understanding what counts as a disposal is central so that you know when the allowance applies.

From experience, one of the biggest misconceptions is that gains only happen when you cash out. In reality, several actions trigger disposals for tax purposes.

Who Gets the Allowance?

The allowance is available to:

Individuals with taxable gains

Trustees of settlements (with a special allowance of £3,000)

Personal representatives of deceased estates in the year of death

If you are married or in a civil partnership:

Each of you has your own separate annual exempt amount

You cannot transfer the allowance itself, but joint ownership of assets can effectively use both allowances

For example:

You sell jointly owned investments and realise a net gain of £10,000

You can use £6,000 of your allowance and £6,000 of your partner’s allowance

You may pay tax only on £10,000 − £12,000 = £0, meaning no capital gains tax to pay

In my opinion, this is one of the simplest and most effective planning points that is often overlooked.

How the Allowance Works in Practice

Let’s illustrate with a practical example from experience.

Example: Share Disposal

Suppose you sell shares and make:

£4,000 profit on Company A

£3,500 profit on Company B

Your total gains in the tax year are:

£4,000 + £3,500 = £7,500

You then apply your annual exempt amount:

£7,500 − £6,000 = £1,500 taxable gain

You pay capital gains tax only on £1,500.

As you see, even if individual gains are small, they combine to use up the allowance.

This is why a holistic view of your disposals each tax year matters.

When Asset Losses Matter

Another practical aspect is that losses can reduce gains before the allowance is applied.

If, for example, you also sold an asset at a loss of £2,000 in the same tax year, the calculation would look like:

Total gains £7,500

Less losses £2,000

Net gains £5,500

Less annual exempt amount £6,000

Net taxable gains £0

In this case, no capital gains tax is payable.

From experience, loss claims are one of the most underused aspects of planning.

You must claim losses for them to count, and they can be carried forward to future years if unused.

Are There Different Allowances for Different Assets?

No. The capital gains tax annual exempt amount of £6,000 applies to all chargeable assets together.

This includes:

Shares and investments

Cryptoassets

Second homes and other property disposals

Business disposals

Chattels and personal possessions above the chattels threshold

There is no separate allowance for property versus other assets.

The implication is that if you make gains on different assets in the same year, they all aggregate before the allowance is applied.

This was the context for the reduction in the allowance. The government simplified and lowered the exemption, so planning really matters.

When the Allowance Cannot Be Used

There are a few situations where the annual exempt amount cannot be used:

Transfers between spouses/civil partners: These are typically on a no gain/no loss basis so the allowance isn’t relevant to the transfer itself

Gifts to charity: Gifts to charities may be exempt from capital gains tax, so the allowance is not needed

Assets held inside tax wrappers: ISAs and pensions do not attract capital gains tax in the first place

In my experience people often misapply the allowance in these scenarios, leading to incorrect tax returns.

How the Allowance Is Used Over Time

Because the capital gains tax allowance applies each tax year, it effectively resets on 6 April each year.

This creates opportunities around timing.

For example:

If you have flexibility on when you sell assets, spreading disposals across two tax years can double the total amount sheltered by the allowance

If you have losses available, timing their recognition can further maximise relief

While I would never recommend delaying a sale purely for tax, if timing aligns with personal financial goals it can make a meaningful difference.

Reporting and Paying Tax on Gains Above the Allowance

If your net gains exceed the annual exempt amount:

You must report them to HMRC

You must calculate the tax due

For property, you may need to report and pay within 60 days of completion

For other assets, reporting is usually through self assessment

This is where careful record keeping matters.

From experience, missing deadlines is much more costly in penalties and interest than the tax itself.

How the Allowance Interacts With Your Income Tax Band

The amount of capital gains tax you pay on gains above the allowance depends on your:

Total taxable income

Whether the gains fall within the basic or higher rate tax bands

For most assets, the rates are:

10 percent on gains within the basic rate band

20 percent on gains above the basic rate band

For residential property (e.g. second homes) the rates are:

18 percent within the basic rate band

28 percent above the basic rate band

In my opinion, considering your overall income position is almost as important as knowing the allowance itself.

Planning Around the Allowance

In practice, using the allowance effectively involves:

Tracking all disposals during the tax year

Considering whether losses are available to offset gains

Using both partners’ allowances where possible

Timing disposals where practical

Understanding when reporting deadlines apply

These steps transform the allowance from a number you know into a tool you use.

From experience, people who plan around allowances pay significantly less tax over the long term.

Common Misunderstandings I See

From experience, the most common misunderstandings include:

Thinking the allowance applies per asset rather than per individual

Believing property gains have a separate allowance

Assuming losses are automatic rather than claimed

Forgetting to use both spouses’ allowances

Ignoring the effect of your overall income band

Most of these stem from not looking at gains holistically.

What Happens if You Do Not Use the Allowance

Unused allowance cannot be transferred to another tax year.

If you do not make any chargeable disposals above the allowance in a tax year:

The allowance is lost

You cannot carry it forward

This is an important point because it highlights that tax planning is not just about losses and gains, but about taking advantage of allowances when they exist.

How the Allowance Has Changed Over Time

Seeing the allowance in context helps understanding.

Over the last decade:

The allowance was frozen then reduced

It was as high as £12,300 per year

Now it is £6,000 in 2025 to 2026

From experience, people often plan based on outdated figures they remember from earlier years.

Tax planning should always reference the current year’s allowance.

What About Trustees and Estates?

Trustees of settlements have a different annual exempt amount.

For the 2025 to 2026 tax year, the trustees’ exemption is £3,000.

This is half the individual allowance.

Executors of deceased estates also have special considerations, and timing around death and disposal periods can affect how gains are treated.

In my experience, trust and estate planning is complex and bespoke advice is often sensible.

Practical Tips From Experience

Here are some practical habits that help you use the CGT allowance well:

Track all disposals: Keep a running total of gains and losses each year

Use both partners’ allowances: Where assets are jointly owned, this usually gives double benefit

Plan timing where possible: If you have flexibility, splitting disposals across years helps

Claim losses promptly: Don’t let losses sit unclaimed

Know reporting deadlines: Especially for property

In my opinion, treating the allowance as a planning asset rather than a number on a website is what makes real tax savings.

My Honest View From Experience

The capital gains tax allowance may seem modest at £6,000 this year, but it is one of the most useful elements of the UK tax system.

In my opinion, the allowance is a fundamental part of your tax planning toolkit, not just a number to glance at once a year.

From experience, the people who derive most benefit are those who:

Understand it is per person

Know how it interacts with losses

Apply it across all their disposals

Plan around timing and reporting

Tax is not just about compliance. It is about making informed decisions that align with your financial goals.

Where this leaves you

So how much is the capital gains tax allowance this year?

For 2025 to 2026 the annual exempt amount is £6,000 per individual and £3,000 for trustees.

It applies across all assets, and is used after accounting for losses in the year.

From experience, the number itself is not the most important part. The important part is understanding how it fits into your wider financial and tax planning.

Once you do that, even a relatively modest allowance becomes a powerful and practical tool.

If you would like to explore related Capital Gains Tax guidance, you may find Is there Capital Gains Tax on selling my main home and What are the penalties for missing the 60-day property CGT deadline useful. For broader Capital Gains Tax guidance, visit our Capital Gains Tax hub.