UK Capital Gains Tax Guide for High Earners (2025/26)

Capital Gains Tax has become significantly more expensive for UK high earners in recent years. The annual exempt amount has been cut from £12,300 to just £3,000, and the October 2024 Autumn Budget raised CGT rates on non-property assets — shares, funds and most other investments — from 10%/20% to 18%/24% for basic and higher-rate taxpayers respectively, with effect from 30 October 2024. These higher rates now apply for the full 2025/26 tax year. If you're holding investments, planning a property sale, or thinking about selling a business, understanding the current CGT rules — and the strategies to mitigate them — is essential.

1. 2025/26 CGT Rates

The October 2024 Autumn Budget was a landmark moment for CGT: rates on non-property assets (shares, funds and most other investments) were raised from 10%/20% to 18%/24% with effect from 30 October 2024. These rates now apply for the full 2025/26 tax year, making CGT on shares and funds equal to the rates on residential property for higher-rate taxpayers. The 2025/26 rates are:

Note: CGT rates are determined by whether the gain, when added to your income, falls in the basic or higher rate band. A basic rate taxpayer with a large gain may pay part at 18% and part at 24%, once the gain pushes them above the higher rate threshold (£50,270 for 2025/26). The October 2024 Budget changes mean shares and funds are now taxed at the same rates as residential property for higher-rate taxpayers — a significant increase from the previous 10%/20%.

2. The £3,000 Annual Exempt Amount — Use It or Lose It

Every UK individual has a CGT annual exempt amount — £3,000 for 2025/26 (unchanged from 2024/25). Gains up to this amount are tax-free each year. Critically, unused exempt amounts cannot be carried forward.

For high earners holding a portfolio of shares or funds, you should be crystallising gains up to £3,000 every tax year, even if you don't need the cash. Sell and immediately repurchase (outside a 30-day wash sale window, or use a bed & ISA) to reset your base cost. Over a decade, this routine "harvesting" can save thousands in future CGT.

3. Bed & ISA and Bed & SIPP Strategies

Bed & ISA: Sell investments in your general investment account and immediately repurchase them within an ISA. Any future gains and income in the ISA are completely tax-free. The initial sale triggers CGT on any existing gain, but using your annual exempt amount and your spouse's allowance can minimise the immediate tax cost.

With the ISA allowance of £20,000 per person (£40,000 for a couple), a systematic bed & ISA programme over several years can move a substantial portfolio into the tax-free wrapper.

Bed & SIPP: Similar concept — sell investments and contribute the proceeds to a SIPP (Self-Invested Personal Pension). You receive income tax relief on the pension contribution (up to 45%), and future growth is sheltered from CGT. This is particularly powerful for higher and additional-rate taxpayers, where the combined CGT saving and pension tax relief can exceed 60%.

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4. Using Your Spouse or Civil Partner's CGT Allowance

Transfers between spouses and civil partners are exempt from CGT. This means you can transfer assets to your spouse before disposal, allowing them to use their own £3,000 annual exempt amount and potentially pay CGT at a lower rate if they're a basic-rate taxpayer.

For a married couple where one partner is a basic-rate taxpayer, gains on shares above the annual exempt amount are taxed at 18% rather than 24% — a meaningful CGT saving. On a £50,000 gain, that's £3,000 saved. Structuring asset ownership between spouses is one of the most straightforward and legitimate tax planning strategies available.

5. Timing Disposals Across Tax Years

The UK tax year ends on 5 April. If you're planning a disposal near year-end, consider whether splitting it across two tax years allows you to use two annual exempt amounts, two sets of basic-rate band, or both.

Timing also interacts with income. In a year where your income is lower — perhaps due to maternity leave, a career break, or a gap year before starting a new role — your CGT rate may be lower, or more of your gain may fall within the basic rate band. Planning large disposals in lower-income years can produce significant savings.

6. Business Asset Disposal Relief (BADR)

BADR applies a reduced CGT rate to qualifying disposals of business assets. From 6 April 2025 the rate is 14%, rising further to 18% from April 2026. The lifetime limit remains £1 million.

Qualifying conditions: you must have owned the business (or shares in a personal company) for at least two years, held at least 5% of ordinary share capital and voting rights, and been an employee or officer. BADR is not available on investment property. If you're considering selling a business, timing relative to the upcoming rate increases is critical — a £1 million gain attracting 18% from April 2026 rather than 14% now costs an extra £40,000.

7. Holdover Relief: Gifting Business Assets

Holdover relief allows you to gift qualifying business assets (and certain other assets) without an immediate CGT charge. The gain is "held over" and deducted from the recipient's base cost — they inherit the gain, and CGT becomes payable when they eventually sell.

This is commonly used in family business succession planning — passing shares to children or other family members while deferring the CGT liability. It can also be combined with Inheritance Tax planning. Both the donor and donee must agree to a holdover relief claim.

8. EIS CGT Deferral Relief

If you have a large CGT liability — perhaps from selling a property or portfolio — EIS deferral relief allows you to postpone that CGT by reinvesting the gain into qualifying EIS shares. The deferred gain becomes taxable when you dispose of the EIS shares, potentially in a future year when your tax position is more favourable.

Unlike income tax relief (capped at £1,000,000 per year), there is no cap on EIS deferral relief. You can defer any amount of CGT by investing the gain into EIS. Combined with the 30% upfront income tax relief on EIS investments, this is one of the most powerful strategies available for high earners with a significant disposal event.

Disclaimer: This article is for educational purposes only and does not constitute tax or financial advice. Tax rates and allowances may change. Consult a qualified UK tax adviser before making any disposal decisions.