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Capital gains tax has quietly become one of the biggest financial headaches of 2026. After steep cuts to the tax-free allowance and last year’s rate rises, more people are discovering they now owe CGT on decisions like selling long-held shares, jewellery or a rental property.
Many who never expected to face the tax are being caught out. If you’re wondering whether you could be next, here’s what you need to know and the steps you can take to keep your bill down.
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In January, people in the UK paid close to £17 billion in capital gains tax – up by a staggering 69% on the same month last year. There are thought to be several reasons behind this big spike.
One factor is likely to be that many investors chose to sell up during the 2024/25 tax year, amidst fears that CGT rates would be increased (which they were, with immediate effect in the October 2024 Budget). A good chunk of that tax would not have been paid until tax returns for that year were filed in January 2026.
Another significant factor is that CGT rule changes are starting to bite.
Sue Allen, chartered financial planner at Chester Rose, says: “Not long ago, you could make up to £12,300 in gains before owing a penny in capital gains tax (CGT). That figure (known as the annual exempt amount) has been reduced significantly.
“The cuts began under the Conservatives, who froze the allowance before cutting it to £6,000 in 2023/24. Labour continued the squeeze, reducing it further to just £3,000. That’s a cut of more than 75% in just a couple of years.”
This means that even modest gains from selling long-held shares, buy-to-let properties or other assets could trigger a bill that wouldn’t have previously existed. Allen adds: “You don’t need to be wealthy to get a capital gains tax bill these days. CGT, once the preserve of the genuinely wealthy, is now catching a much wider net.”
When tax is payable, that increase in October 2024 means it’s also now being paid at higher rates, with the rate for basic rate taxpayers jumping from 10% to 18% and the higher rate from 20% to 24%.
You’ll currently have to pay CGT if you sell taxable assets and make a profit of more than £3,000 (the annual exempt amount).
That includes investments like shares and funds (outside of an ISA or pension), and properties that aren’t your main home, such as rentals or holiday lets.
It may also be payable when you sell ‘chattels’ like jewellery, antiques or art (but not cars) worth £6,000 or more. Because gold has soared in price in recent years, selling gold jewellery (or any gold except for Royal Mint coins that are legal tender) can easily rack up a CGT bill.
The tax is only payable on the gain (the growth in its value during your ownership), not its total value.
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Lucie Spencer, financial planning partner at Evelyn Partners, says: “Retirees are often harder hit because they sell assets such as shares to provide their income and with smaller allowances more of each sale is taxed.”
Property investors will also feel the pain, says Allen. “Few groups feel the pinch more acutely than buy-to-let landlords. When interest rates were at historic lows, property investment made obvious sense – cheap mortgages, rising rents, and steadily appreciating assets. But with rates rising sharply and the rental market becoming increasingly difficult to navigate, many landlords are looking to sell up and get out.”
“The problem is that years of property price growth mean most are sitting on substantial gains. Selling now means handing 24% of those gains straight to HMRC for higher-rate taxpayers. Selling a property that has doubled in value, the bill can run to tens of thousands of pounds.”
There are a ways you can cut your CGT bill.
“Buy assets you wish to buy and hold for an extended period in an ISA,” says Spencer. Each year you can pay up to £20,000 into stocks and shares ISAs, where there will be no tax to pay on your capital gains, or your dividends.
You can also shelter investments in your pension. Although your income will be taxable (only 25% is paid tax free), you’ll get tax relief on contributions and your money will grow tax free. Just note that if you have already made a taxable withdrawal from your pension, your allowance will be just £10,000 a year (down from 100% of your income, up to £60,000).
If you’ve got investments like shares held outside ISAs or pensions, it’s possible to sell them and immediately rebuy them within a stocks and shares ISA, in a process referred to as Bed & ISA. This gets you around the ‘30-day rule’ which prevents you from selling and quickly rebuying investments for tax purposes.
To complete a Bed and ISA you’ll need to have a trading account and an ISA on the same investment platform, and have enough remaining ISA allowance for the year. You also need to avoid breaching the annual allowance for gains (£3,000 a year) to avoid triggering a CGT bill – if you have a lot of investments to move over, it may be worth transferring them gradually over several tax years.
You can also use a similar ‘Bed and pension’ process to move holdings in general investment accounts into a pension.
It’s also a good idea to team up with your spouse, if you’re married or in a civil partnership, as you can give assets to each other without triggering CGT. That gives you the opportunity to tactically split assets between you.
James Scott-Hopkins, founder at EXE Capital Management says: “This allows families to rebalance ownership, utilise both annual exemptions, and realise gains in the hands of a lower-rate taxpayer, significantly reducing the overall tax burden.”
If you don’t need the cash straight away, you may be able to defer selling investments to reduce the rate of CGT that you eventually pay. Scott-Hopkins adds: “CGT rates are linked to income. Realising gains in a year when income is lower, for example after retirement, can reduce the CGT rate significantly.”
If you never actually get around to selling them, there’s no CGT to pay. Instead the assets are treated as if they passed to the person inheriting them, at their market value at the time of your death.
It can be harder to mitigate CGT when you’re selling a property, but there are still ways to reduce your bill. Lee DeRedder, a financial planner at Shackleton Advisers, points out you can reduce the value of your capital gain (and therefore the tax that will be payable) by making the most of your allowable expenses. These might include things like solicitors’ fees on property purchases, stamp duty (or its equivalent in Scotland and Wales) and property improvement costs.
“Good record-keeping is essential though, as you may need to evidence any costs incurred to the taxman,” he says.
If you have ever lost money on an investment, it’s possible to take that loss and offset it against a gain, to reduce your tax bill. DeRedder adds: “If done carefully, and very much depending on individual circumstances, realising capital losses can be an effective way to reduce any CGT liability an individual might face.”
Any losses should first be offset against any gains from that tax year. Any ‘unused’ losses can be carried forwards indefinitely to reduce future taxable gains. To use a loss from previous years you will need to report it to HMRC on your tax return within four years.
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