UK Capital Gains Tax: Rates, Exemptions, and Planning for International Investors

Capital Gains Tax (CGT) is one of the most important taxes for HNW individuals to plan around, yet its rules are frequently misunderstood — particularly by those who are not UK resident or who move between jurisdictions. The October 2024 Autumn Budget made significant changes to CGT rates, and the non-resident CGT rules for UK property have been in place since 2015. This guide covers the current position as of the 2026/27 tax year.

What Is Capital Gains Tax?

CGT is charged on the profit (gain) made when you dispose of an asset. "Disposal" includes selling an asset, gifting it (other than to a spouse or civil partner), exchanging it, or receiving insurance proceeds following its loss or destruction.

The gain is calculated as the proceeds received (or market value if gifted) less the original acquisition cost (or market value at acquisition) and any allowable expenditure such as improvement costs and dealing costs.

Current CGT Rates (2026/27)

Following the October 2024 Budget, which took effect from 30 October 2024, CGT rates for UK resident individuals are:

Residential property:

• Basic rate taxpayer: 18%
• Higher/additional rate taxpayer: 24%

All other assets (shares, bonds, commercial property, business assets, collectibles):

• Basic rate taxpayer: 18%
• Higher/additional rate taxpayer: 24%

Note that prior to the October 2024 Budget, the main rates for non-residential assets were 10%/20% (for basic and higher rate taxpayers respectively). The Budget aligned the residential and non-residential rates, representing a substantial increase for those with investment portfolios, business assets, and commercial property.

Trustees and personal representatives:

• Residential property: 24%
• Other assets: 24%

Companies: do not pay CGT; instead, gains are included in taxable profits and charged to Corporation Tax.

The Annual Exempt Amount

The CGT annual exempt amount (AEA) — the amount of gain each individual can make each year before any CGT is payable — has been significantly reduced in recent years:

• 2022/23: £12,300
• 2023/24: £6,000
• 2024/25 and 2025/26: £3,000

The AEA cannot be carried forward. Use it or lose it each tax year. For couples (married or civil partnerships), each party has their own AEA.

Business Asset Disposal Relief (BADR)

Formerly known as Entrepreneurs' Relief, BADR provides a reduced rate of CGT on qualifying business disposals. The current position following the October 2024 Budget changes:

• Lifetime limit: £1 million of qualifying gains
• Rate: 18% from 6 April 2026 (was 14% in 2025/26; was 10% before April 2025)

To qualify, the individual must have owned the business (or shares in the trading company) for at least two years, and must have been a working director or employee with at least 5% of ordinary share capital and voting rights.

The reduction of the lifetime limit from £10 million (where it stood from 2010 to 2020, having been cut from £1 million then restored) to £1 million significantly limits the relief for larger business exits.

Self-Assessment and Reporting Requirements

For UK residents, CGT is reported and paid through the annual Self Assessment tax return. The key deadlines:

• Tax return filing deadline (paper): 31 October after the tax year end
• Tax return filing deadline (online): 31 January following the tax year end
• Payment deadline: 31 January following the tax year end

Exception for UK residential property: UK residents who dispose of UK residential property must report the gain and pay the CGT within 60 days of completion. This is a separate requirement — the payment on account must be made within 60 days, even if the annual return is not yet due. Failure to meet the 60-day deadline results in an automatic penalty.

Non-Resident CGT Rules

Non-UK residents are not generally subject to UK CGT on most assets. However, significant exceptions apply:

UK residential property (NRCGT — Non-Resident Capital Gains Tax):

Non-UK residents have been subject to CGT on UK residential property disposals since April 2015. The key rules:

• The gain is calculated by reference to the property's market value on 5 April 2015 (for properties purchased before that date), not the original acquisition cost, for individuals. Those who purchased before April 2015 can elect to use the original cost if that produces a smaller gain.
• The rate is 18%/24% — the same as for UK residents.
• The 60-day reporting and payment deadline applies to non-residents too. A return must be filed within 60 days of completion, even where the gain is nil (e.g., a loss, or where private residence relief applies).
• Non-residents who are also required to file an annual UK Self Assessment return report the NRCGT on the annual return too, but the 60-day return is still required.

UK commercial property:

Non-UK residents became subject to CGT on UK commercial property from April 2019. The same rates and reporting rules apply.

Indirect disposals:

Since April 2019, non-residents are also subject to CGT on disposals of interests in entities (companies, partnerships, trusts) where the entity derives 75% or more of its gross asset value from UK land. This prevents the use of corporate structures to avoid the NRCGT rules.

The 60-day return filing obligation:

Non-residents must file an NRCGT return (via the UK HMRC online system) within 60 days of completion of any UK property disposal, regardless of whether a CGT liability arises. A penalty applies for late filing even where no tax is due.

Private Residence Relief

For UK residents (and in limited circumstances, some non-residents), Private Residence Relief (PRR) can eliminate or reduce the CGT on the disposal of a main home:

• If the property was your only or main residence for the entire period of ownership, 100% of the gain is exempt.
• The final 9 months of ownership are always treated as a period of residence (reduced from 18 months in 2020), regardless of whether you actually lived there.
• Lettings relief has been significantly restricted — it now only applies where the owner was in shared occupancy with the tenant at the time, making it largely obsolete for most landlords.

Non-residents can claim PRR on UK residential property only if they spent at least 90 days in the property during the relevant tax year (or their spouse/civil partner did). This is a strict test.

Planning Strategies for Internationally Mobile Investors

Pre-departure crystallisation. UK residents considering departure should review their capital gains position before leaving. In the year of departure, you may be able to realise gains on non-UK assets whilst still UK resident and using the annual exempt amount, before those assets would no longer be subject to UK CGT once you leave. Conversely, for UK assets, you may wish to hold on until after departure (when they may fall outside UK CGT for non-residential assets), though HMRC's temporary non-residence anti-avoidance rules apply.

Temporary non-residence anti-avoidance. If you leave the UK for fewer than five complete tax years and return to UK residency, gains crystallised whilst abroad on assets that were UK-sited when you left may be brought back into charge on your return. This rule is designed to prevent "gap year" CGT avoidance.

Bed and ISA. A classic annual planning technique: sell investments outside an ISA wrapper, crystallise any gains (using the annual exempt amount), and immediately buy the same investments within an ISA. The future gains and income in the ISA are then tax-free. Limited to the annual ISA allowance (£20,000).

Spousal transfers. Transfers between spouses and civil partners are on a no-gain/no-loss basis. This allows gains to be shifted to a spouse with a lower marginal tax rate or unused annual exempt amount.

Offshore bond wrappers. Investment gains rolled up within an offshore bond are not subject to annual CGT — gains are only taxed on encashment (as income, not capital gains). For long-term investors who do not need regular access to funds, this can be tax-efficient.

BADR planning. For business owners, ensure the two-year holding and working criteria for BADR are met before any sale. The rate is 18% in 2026/27, compared to the 24% standard rate — still a meaningful saving on qualifying disposals up to the £1 million lifetime limit.

Interaction with Double Tax Treaties

Where a UK resident pays overseas tax on a gain (e.g., a French property attracts French capital gains tax), the UK-France double tax agreement determines the allocation of taxing rights. In most cases, the country where the property is located has primary taxing rights, with the UK providing relief for overseas tax paid against the UK CGT liability. The exact treatment depends on the specific DTA.

Non-residents with offshore gains on non-UK assets are generally not subject to UK CGT, though they should check the DTA in their country of residence for any provisions affecting their position.

Compliance Caveats

CGT rules are complex and change frequently. The rates, exemptions, and rules described in this article reflect the position as of June 2026 but may have changed. This article is for information only and does not constitute tax advice. You should seek advice from a qualified UK tax adviser before making any disposal of assets or restructuring your arrangements. Investments can fall as well as rise in value; gains are not guaranteed.

How Global Investments Can Help

Global Investments advises internationally mobile HNW individuals on the capital gains planning aspects of investment portfolios, property holdings, and business sales. Our team can help you understand your CGT position, identify planning opportunities within the current rules, and connect you with qualified UK tax advisers for the technical implementation. Contact us to discuss your situation.