The annual capital gains tax exemption dropped from £6,000 to £3,000 on 6 April 2024 and stayed there for 2026/27 — which means anyone with even modest unsheltered investment activity, second-property sales, or significant resale income has a real chance of paying CGT for the first time. What did not make headlines, but matters far more to anyone on Vinted, Depop, eBay, StubHub or any other "platform with a reporting obligation": HMRC's October 2025 update to the trading-vs-investing distinction now treats repeat resale activity on the same category as trading income by default unless rebutted with evidence.
The CGT structure for 2026/27
- Annual exempt amount: £3,000 (down from £6,000 in 2023/24 and £12,300 in 2022/23)
- Basic-rate band (over £3,000, up to total taxable income £50,270): 10% on most assets, 18% on residential property
- Higher and additional rate: 20% on most assets, 24% on residential property (the latter introduced in October 2024)
- Carried interest, business asset disposal relief: separate rules, 14% effective from 6 April 2026
The side-hustler problem
The HMRC platform-reporting obligations introduced in January 2024 (and now in full enforcement) required every UK-active marketplace — eBay, Vinted, Depop, Amazon Marketplace, Etsy, Airbnb, Booking.com, Uber, Deliveroo and a long list of others — to send HMRC an annual report of every seller with more than 30 sales or £1,700 in gross receipts. The 2025/26 tax year data lands at HMRC in June 2026, and is being cross-referenced to self-assessment returns from October onwards.
For someone who sold £4,500 worth of secondhand designer clothing through Vinted in 2025/26: if HMRC accepts the items as personal possessions sold for less than original cost, no tax. If HMRC challenges and reclassifies as trading (because the volume and pattern look like a business), the whole £4,500 is income — and there is no CGT allowance applying, because trading income falls outside CGT entirely.
The badges of trade — what HMRC actually looks at
- Profit motive at acquisition. Bought to use, then sold years later — investment. Bought specifically to resell — trading.
- Subject matter. A house has a use; 14 concert tickets does not.
- Repetition and frequency. A single eBay sale of £6,000 of furniture from a deceased relative — clearly not trading. Forty-six sales across nine months on the same category — looks like trading.
- Modification and presentation. Buying items, cleaning and repairing them, photographing on a white backdrop — these are trading signals.
- Funding source. Cash from a savings account suggests an investment. Stock funded by short-term credit looks like commercial activity.
What to do if HMRC sends a "Nudge" letter
From summer 2026, HMRC will issue nudge letters to anyone whose platform data exceeds the de minimis £1,700 threshold and who has not declared the income on self-assessment. The letter is not an assessment — it is a request to either file/amend a return or explain why no tax is due. Ignoring it triggers a full compliance enquiry within 90 days.
If your sales were genuinely personal (clearing out wardrobes, selling a deceased relative's possessions, downsizing a hobby collection), reply with evidence: original purchase invoices, dates of acquisition, photographs of items in domestic context. The "personal possession" defence holds, but only with documentation.
The four practical CGT moves for 2026/27
1. Crystallise gains in tranches across spouses — each spouse has their own £3,000 allowance. 2. Use the annual exemption deliberately; gains carried forward against future allowances do not exist. 3. Bed-and-spouse to reset cost basis without losing the 30-day rule. 4. Consider moving unsheltered investments to an ISA at the £20,000 annual subscription — the new bed-and-ISA mechanism in 2026/27 has finally been fully automated by most platforms (Hargreaves, Vanguard, AJ Bell), making the rollover a single click.