The Questions Worth Answering Before a Transaction Becomes Binding

Capital Gains Tax can arise in more situations than simply selling an investment for a profit. Giving an asset to a family member, transferring ownership, exchanging one investment for another or selling something for less than its full value can all count as disposals.

The tax is charged on the gain rather than the total amount received. What you actually pay depends on the type of asset, its original cost, your income, previous losses, available reliefs and who receives the asset. Timing can change the result too.

HMRC’s latest available annual statistics show that 378,000 taxpayers incurred Capital Gains Tax liabilities of £12.1 billion in 2023/24, based on total taxable gains of £65.9 billion. These remain the latest complete annual figures available as at 7 August 2026.

Working out the position before committing to a transaction can prevent unexpected bills and identify reliefs that may otherwise be missed.

What Counts as a Disposal?

Capital Gains Tax, or CGT, generally applies when you dispose of a chargeable asset that has increased in value. A disposal can happen without a conventional sale. It can include selling an asset, giving one away, transferring ownership, exchanging one asset for another, or receiving compensation for an asset that has been lost or destroyed.

This means a transaction can create a CGT liability even where you receive little or no cash.

Common chargeable assets include second homes and investment properties, shares held outside an ISA, business interests, land, certain valuable personal possessions and cryptoassets. Your main home will often qualify for Private Residence Relief, although that exemption applies conditionally rather than automatically.

The Allowance and Rates for 2026/27

Individuals have a £3,000 annual exempt amount for 2026/27, so the first £3,000 of net chargeable gains for the tax year can normally fall outside CGT. For trusts, the figure is £1,500. The allowance applies across your disposals for the whole year rather than separately to each asset, and an unused amount cannot be carried forward.

Suppose you make an £8,000 gain on shares and a £2,000 loss on another investment. Your net gain is £6,000. After deducting the £3,000 annual exempt amount, £3,000 would remain chargeable, assuming no other gains, losses or reliefs apply. The reduction in the annual exempt amount over recent years means relatively modest gains can now create a reporting or tax liability.

For disposals from 6 April 2026, the main CGT rates for individuals are:

The standard Personal Allowance remains £12,570 for 2026/27 and the UK basic rate limit used for CGT purposes is £37,700. The interaction between income and gains determines how much of a taxable gain falls at 18% and how much at 24%, and special rules apply when calculating the available basic rate band for Scottish taxpayers.

Someone already above the relevant basic rate band will normally pay 24% unless a specific relief provides a different rate. Someone with unused basic rate band may pay 18% on part or all of their gain. This is one reason your expected income for the year should form part of any CGT calculation.

Work Out the Real Gain First

CGT does not normally apply simply to the difference between the amount originally paid and the amount received. Certain costs can reduce the chargeable gain.

Depending on the asset, these may include the original purchase price, Stamp Duty or Stamp Duty Land Tax paid on acquisition, legal and professional fees on buying and selling, valuation fees and qualifying expenditure that enhanced the asset’s value. For property, an extension or other capital improvement may qualify, while normal repairs and maintenance generally do not, and the improvement normally needs to remain reflected in the asset when it is disposed of.

Keeping purchase documents and records of improvement expenditure can make a significant difference several years later. HMRC expects taxpayers to retain contracts, receipts, invoices, professional fees and valuations used to calculate gains.

Gifting an Asset Does Not Automatically Avoid CGT

One of the biggest misconceptions surrounding CGT is that giving an asset away removes the tax charge because no money changes hands. Usually it does not.

When you give a chargeable asset to another person, HMRC will generally treat the disposal as taking place at its market value on the date of the gift. The same principle can apply where you deliberately sell an asset for less than it is worth to help the buyer.

Suppose you bought an investment property for £150,000 and it is now worth £300,000. Giving it to an adult child for nothing does not normally produce a CGT disposal value of £0. Broadly, the calculation starts by treating you as disposing of the property at its £300,000 market value, with the resulting gain then calculated after allowable costs and any available reliefs.

This can create a tax bill without the cash proceeds that would normally fund it. Transfers to children, grandchildren and other family members should therefore be reviewed before the gift takes place. Inheritance Tax and Stamp Duty Land Tax may also apply, so CGT should be considered alongside them rather than on its own.

Different Rules Apply to Spouses and Civil Partners

Transfers between spouses and civil partners who live together generally take place on a no gain, no loss basis. The person transferring does not normally realise an immediate taxable gain, and the receiving spouse effectively inherits the existing CGT history of the asset.

This can offer legitimate planning opportunities where one spouse has unused annual exempt amount, capital losses available, more unused basic rate band, or a different proportion of the asset already in their ownership.

A transfer needs to represent a genuine change in beneficial ownership, taking place before the eventual disposal rather than being recorded retrospectively after a sale has been agreed. It also leaves the underlying gain in place. It changes which person owns the asset and may therefore change how the eventual gain is taxed.

Special rules apply on separation. For disposals on or after 6 April 2023, separating couples can generally make no gain, no loss transfers until the earlier of the end of the third tax year after the tax year in which they ceased living together, or the date a court grants the divorce or dissolution. Where assets transfer under a formal agreement or relevant court order, that treatment can continue without the normal three-year limit.

Property, Shares and Crypto

Where CGT is due on the sale of most UK residential property, it generally needs to be reported and paid within 60 days of completion. That deadline can arrive well before the normal Self Assessment deadline, so calculate the expected gain and gather records before completion where possible.

Private Residence Relief means many people pay no CGT when selling their main home, and you can only have one PRR residence at a time. Full relief will normally apply where the property has been your only or main home throughout your ownership, no part has been let in a way that restricts relief, no part has been used exclusively for business, the property and grounds meet the relevant conditions, and you did not acquire it primarily to make a gain. The position needs more attention where you have owned more than one home, let the property for part of your ownership, lived elsewhere for extended periods, or hold significant land or grounds. Relief normally covers the home and its garden or grounds, with a standard permitted area of 0.5 hectares including the site of the dwelling. A larger area can sometimes qualify where the character and size of the property make the additional land necessary for its reasonable enjoyment, subject to additional conditions. Where a property has qualified as your main residence at some point, the final nine months of ownership will generally qualify even if you were no longer living there. Letting Relief is now much more restricted than it was historically, generally applying where you shared occupation with a tenant, and limited to a maximum of £40,000 per owner.

On investments, shares held within an ISA do not create a CGT liability when sold, and UK Government gilts and certain other investments are also exempt. Where shares have been accumulated over several years, establishing their CGT cost can require more than looking at the price of the first purchase. Special identification rules can apply where you buy and sell shares in the same company around the same date, and corporate actions, rights issues and previous transfers between spouses can all affect the base cost.

Cryptoassets sit within the CGT rules for many individual investors. A disposal can occur when you sell tokens for sterling, exchange one type of token for another, use cryptoassets to buy goods or services, or give tokens to someone other than a spouse, civil partner or qualifying charity. Exchanging Bitcoin for another cryptoasset can therefore create a taxable disposal even though no sterling enters your bank account.

Certain personal possessions can become chargeable where their disposal value exceeds £6,000, including jewellery, paintings, antiques, coins and stamps. Private cars are generally exempt. Special rules apply when items form a set, so splitting a valuable collection does not necessarily produce a separate £6,000 limit for every item.

Reliefs Worth Checking Before a Business Disposal

A gift of a business or shares in a family trading company can create a sizeable gain even where nothing is paid by the recipient. Gift Hold-Over Relief may allow qualifying gains to be deferred, with the recipient taking a reduced acquisition cost so the deferred gain can become taxable when they eventually dispose of the asset. A joint claim will normally be needed.

A change to the calculation of Gift Hold-Over Relief for certain company shares has been announced to take effect for disposals from 6 April 2027. It does not apply to 2026/27 disposals, and anyone planning a succession extending into the next tax year should review the legislation before proceeding.

People selling a business or qualifying shares should also check Business Asset Disposal Relief. For qualifying disposals made from 6 April 2026, the BADR rate is 18%, up from 14% in 2025/26 and 10% for qualifying disposals on or before 5 April 2025. The lifetime limit remains £1 million. Conditions normally need to have been met for at least two years before disposal, so check eligibility well before a sale completes.

Losses, Timing and Inherited Assets

Previous investment losses can reduce a future CGT bill where they have been properly claimed. Allowable losses arising in the same tax year are generally set against gains first, and unused losses from earlier years can then be used against gains, although the rules are designed so brought-forward losses do not normally reduce gains below the annual exempt amount unnecessarily. HMRC generally allows a taxpayer to claim an allowable capital loss up to four years after the end of the tax year in which the disposal took place.

Timing matters too. Where you control the timing of a disposal, completing transactions in different tax years can sometimes change the result, because each year has its own annual exempt amount and income position. Determining the CGT disposal date is not always as simple as looking at when money arrives in your bank account: for many transactions completed under an unconditional contract, the date of the contract determines the disposal date rather than the date of payment or completion. Tax-year planning should therefore happen before contracts become binding.

Inherited assets work differently again. They generally use their market value at the date of death as the beneficiary’s starting value, subject to the relevant rules and any value agreed for Inheritance Tax purposes, so a later sale is broadly calculated by reference to that probate value rather than what the deceased originally paid. Inheritance Tax and estate-planning considerations also need to be taken into account, so the CGT outcome should form part of succession decisions rather than driving them.

What to Check Before You Dispose of an Asset

• What you originally paid and whether you have evidence
• The current market value, particularly for gifts or transfers between connected people
• Allowable acquisition, disposal and improvement costs
• Any previous capital losses available to claim
• Your other expected gains during the tax year
• Your expected taxable income, which may affect whether gains are taxed at 18% or 24%
• Whether an exemption or relief applies, including Private Residence Relief, Gift Hold-Over Relief or Business Asset Disposal Relief
• Whether transferring ownership before sale is appropriate, particularly between spouses or civil partners
• The correct CGT disposal date, and whether a 60-day property reporting deadline applies
• Whether you will have enough cash available to pay the resulting tax

The best point to consider these questions is before the transaction becomes binding. Once a sale has completed or an asset has legally changed ownership, many of the available planning options may no longer be possible.

Capital Gains Tax should form part of the decision to sell, gift or transfer an asset, rather than being treated solely as a reporting exercise afterwards.

If you are planning to sell, gift or transfer an asset, get in touch with the Caseron team before taking action so we can help you understand the potential Capital Gains Tax implications.