Capital Gains Tax Allowance 2025/26: Don’t Waste Your £3,000 Exemption

As the 2025/26 tax year ends on 5 April 2026, it’s a good time to review any assets you may be planning to sell. If you expect to make a capital gain and haven’t used your Capital Gains Tax (CGT) annual exempt amount, you may be able to reduce your tax bill by selling before the tax year ends.

This allowance is use it or lose it—if you don’t use it during the year, it can’t be carried forward.

What Is the Capital Gains Tax Annual Exempt Amount?

Every individual has a yearly tax-free allowance for capital gains. This means you can make gains up to a certain amount without paying CGT, after deducting allowable losses.

For the 2025/26 tax year, the annual exempt amount is:
✅ £3,000

Why This Allowance Matters

If your total gains for the year (after losses) are covered by the annual exempt amount, you pay no CGT.

Even though £3,000 may seem small, it still has real value:

• Basic rate taxpayer: saves up to £540

• Higher rate taxpayer: saves up to £720
  

Use It or Lose It: The Key Rule

The annual exempt amount cannot be carried forward.
So, if you don’t use your £3,000 allowance in 2025/26, it disappears on 6 April 2026.

That’s why timing disposals can make a big difference.

Example: How Selling Before 5 April Can Reduce CGT

Ben plans to sell two sets of shares to fund a new kitchen in June 2026:

• Shares A gain: £4,000

• Shares B gain: £5,000

• Total gain: £9,000

• Ben is a higher rate taxpayer

• He has not used his 2025/26 CGT allowance

❌ If Ben sells everything in May 2026

All gains fall into the 2026/27 tax year:

• Gain: £9,000

• Less annual exempt amount: £3,000

• Chargeable gain: £6,000

• CGT @ 24% = £1,440

✅ If Ben sells some shares before 6 April 2026

Ben sells Shares A in March 2026:

• Gain: £4,000

• Less 2025/26 allowance: £3,000

• Chargeable gain: £1,000

• CGT @ 24% = £240

Then he sells Shares B after 5 April 2026:

• Gain: £5,000

• Less 2026/27 allowance: £3,000

• Chargeable gain: £2,000

• CGT @ 24% = £480

💡 Total CGT Paid

£240 + £480 = £720

✅ Tax Saved

Ben reduces his CGT bill from £1,440 to £720, saving £720 just by using both years’ allowances.

Spouses and Civil Partners: Double the Allowance

Spouses and civil partners can transfer assets between them using special CGT rules. These transfers usually happen at no gain and no loss, meaning no CGT is triggered at the time of transfer.

This strategy is useful if one partner has not used their annual exempt amount.

Example: Using Both Partners’ Allowances

Julie plans to sell shares in March 2026:

• Gain: £7,000

• Julie has not used her 2025/26 allowance

• Her wife Jane has also not used her allowance

• Jane will not make any disposals in 2025/26

❌ If Julie sells everything herself

• Gain: £7,000

• Less allowance: £3,000

• Chargeable gain: £4,000

• CGT @ 18% = £720

✅ If Julie transfers part of the shares to Jane first

Julie transfers 3/7 of the shares to Jane, and both sell in March 2026:

• Jane’s gain: £3,000

  • Covered fully by her £3,000 allowance → £0 tax

• Julie’s gain: £4,000

  • Less her allowance: £3,000

  • Chargeable gain: £1,000

  • CGT @ 18% = £180

✅ Tax Saved

£720 – £180 = £540 saved by using both annual exempt amounts.

Key Takeaways

Before 5 April 2026, it may be worth reviewing any planned disposals if:

• You expect to make a capital gain

• You haven’t used your £3,000 CGT allowance

• You can split disposals across tax years

• You can use a spouse or civil partner’s unused allowance

Final Tip

If you are considering selling shares, property (not your main home), crypto, or other investments, speak to an accountant early. A small timing change can lead to significant tax savings.

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