UK Capital Gains Tax 2026: New Allowances and Bed and ISA Tactics

Capital Gains Tax has quietly become one of the most painful taxes in British personal finance. The annual exempt amount has been cut from £12,300 in 2022/23 to just £3,000 from 6 April 2024 onwards — a 76 percent reduction in two years that has pulled hundreds of thousands of ordinary investors and second-home owners into a tax they had never previously encountered.

For 2026/27, that £3,000 allowance remains in place, the rates have been levelled following the October 2024 Budget changes, and HMRC's reporting machinery has tightened considerably. This guide unpacks where things stand in April 2026 and how to use Bed and ISA — the most useful tool retail investors have left — without falling into the avoidable traps.

The 2026/27 CGT framework at a glance

Allowances and rates

• Annual exempt amount: £3,000 per individual, £1,500 for trusts
• Main rate (basic-rate band): 18 percent on most assets
• Main rate (higher and additional-rate band): 24 percent on most assets
• Residential property gains: same 18 / 24 percent rates following the alignment in October 2024
• Carried interest: 32 percent flat, transitioning to a fully income-tax-based regime from April 2026
• Business Asset Disposal Relief (formerly Entrepreneurs' Relief): 14 percent rate for qualifying disposals in 2025/26, rising to 18 percent from April 2026, with a £1m lifetime limit

What is taxed

CGT applies on gains from disposing of: shares and funds held outside an ISA or pension, second homes and buy-to-let property, business assets, valuable personal possessions worth more than £6,000 (paintings, jewellery, antiques), and crypto assets. Your main residence is generally exempt under Private Residence Relief, with caveats around large gardens, business use and periods of absence.

Reporting deadlines you must not miss

Residential property: 60-day window

Since October 2021, any UK residential property gain that creates a CGT liability must be reported and paid via HMRC's online CGT on UK Property service within 60 days of completion. The penalty regime is tough — £100 fixed penalty after 60 days, daily penalties after 6 months, plus interest on unpaid tax.

Other assets: through Self Assessment

Gains on shares, funds, business assets and crypto are reported on the Self Assessment return for the tax year, due by 31 January following the end of the tax year (31 January 2027 for the 2025/26 year just ended).

The Real Time Capital Gains Tax service

For taxpayers not already in Self Assessment, HMRC's Real Time CGT service lets you report gains as they happen and pay immediately. It still requires a Government Gateway account and is most useful for one-off disposals.

Crypto reporting

From January 2026 onwards, UK crypto exchanges and platforms are required to share customer transaction data with HMRC under the OECD's Crypto-Asset Reporting Framework (CARF). HMRC's nudge letter campaigns to crypto investors have already escalated significantly in early 2026 — undeclared historic gains are increasingly being detected automatically.

What dropped to a £3,000 allowance actually means

In 2022/23, an investor with a £100,000 General Investment Account growing at 7 percent annually had roughly £7,000 of paper gains a year — comfortably inside the old £12,300 allowance. They paid no CGT and never thought about it.

In 2026/27 that same investor with the same portfolio has £7,000 of gains, a £3,000 allowance, and £4,000 of taxable gains. At the 18 percent basic rate that is £720 of tax, at 24 percent it is £960. The cut has effectively imposed a new tax on every middle-income GIA holder with a portfolio above roughly £45,000.

Bed and ISA: the single most useful retail CGT tool

What it is

Bed and ISA is the process of selling investments held in a General Investment Account and immediately rebuying them inside a Stocks and Shares ISA, using your annual ISA allowance (£20,000 for 2026/27 unless changed). Once inside the ISA, all future gains and dividends are completely shielded from CGT and dividend tax.

Why it works in 2026

The 30-day "bed and breakfasting" rule that prevents you from selling and rebuying in your own name to refresh a CGT base does not apply when the rebuy happens inside an ISA. HMRC explicitly treats the ISA as a different tax wrapper. This is the deliberate exception that makes Bed and ISA legal and uncontroversial.

How to do it properly

1. Confirm your ISA allowance for the year is unused (or the unused portion of it)
2. Calculate the gain you will realise on the GIA disposal — keep it inside your £3,000 annual exempt amount where possible
3. Use your platform's Bed and ISA service if they offer one (Hargreaves Lansdown, AJ Bell, Interactive Investor, Fidelity and Vanguard Investor all do) — this minimises out-of-market time
4. If your platform does not offer a streamlined service, sell on the GIA, immediately repurchase inside the ISA (most platforms allow same-day or next-day execution)
5. Keep documentary evidence of the sale price, the new ISA purchase price and the date — you will need these for the Self Assessment return covering the year of disposal

The realistic strategy

Most investors in this situation should run a multi-year Bed and ISA programme. Move £20,000 of GIA holdings into the ISA each tax year, keeping the realised gain under £3,000 per spouse (or carefully managed slightly above if it makes long-term sense to crystallise more now). A married couple working together can shift £40,000 of holdings annually using two ISA allowances and two CGT allowances.

Watch the actual gain, not just the disposal value

The £3,000 allowance applies to the gain, not the sale proceeds. Selling £18,000 of a fund where £15,000 was the original purchase cost realises only £3,000 of gain — comfortably inside the allowance. Selling £18,000 of a fund where £6,000 was the original cost realises £12,000 of gain and creates a £9,000 taxable amount.

Other CGT planning tools that still work in 2026

Inter-spouse transfers

Transfers of assets between spouses or civil partners remain completely outside CGT under section 58 TCGA 1992. This is the foundation of double-allowance planning. The receiving spouse takes on the original cost basis, so the gain is preserved and merely shifted onto their tax return.

Loss harvesting

Realised capital losses are first offset against gains in the same tax year, with any excess carried forward indefinitely once formally claimed within 4 years of the end of the loss-making year. In a portfolio with both winners and losers, deliberately crystallising losses in the same year as gains is a textbook tactic.

Pensions

Pension contributions reduce your taxable income. If a contribution drops you from the higher-rate band into the basic-rate band, your CGT rate on relevant gains falls from 24 to 18 percent for the same tax year.

EIS and SEIS reinvestment relief

For sophisticated investors only, but Enterprise Investment Scheme and Seed EIS reinvestment can defer or eliminate CGT on a qualifying gain. Concentration risk and illiquidity make these unsuitable for most retail investors despite the headline reliefs.

Common mistakes HMRC actively pursues in 2026

• Assuming crypto gains are invisible — CARF data sharing is now operational
• Forgetting to report a second-home sale within 60 days because the gain "felt small"
• Using a Bed and ISA but missing the Self Assessment reporting on the GIA-side disposal
• Transferring assets to a spouse only after a formal sale agreement has been made (HMRC views this as artificial and challenges it)
• Treating share buybacks as tax-free — they are usually fully chargeable disposals

The bottom line for 2026/27

The era of casually growing a General Investment Account without thinking about CGT is over. With a £3,000 allowance, real-time reporting on residential property, mandatory data sharing on crypto and a HMRC nudge-letter regime that is increasingly automated, every retail investor with assets outside an ISA or pension needs an active plan. Bed and ISA, sensibly executed across multiple tax years and ideally across two spouses, remains the single most powerful repair tool — but it only works if you start using it now, not after the gain has compounded into something large enough to be painful.

How HMRC actually finds undeclared gains

HMRC's Connect data system has matured into one of the most powerful tax-detection engines in Europe. It cross-references Land Registry transactions with Self Assessment returns, broker reports under the Common Reporting Standard, crypto exchange data under CARF, share buyback notifications and even auction house sales. A second-home sale that triggers a Land Registry transfer but no matching CGT return is automatically flagged, usually within 12 months.

The polite first contact is a "nudge letter" inviting voluntary disclosure. Failure to respond escalates quickly to a formal enquiry, with penalties of 30 to 100 percent of the unpaid tax depending on whether HMRC views the omission as careless, deliberate or concealed. The Worldwide Disclosure Facility remains open for offshore matters and offers preferential penalty rates for genuine voluntary disclosure.

Practical examples for 2026/27

Example 1: The accidental landlord

Sarah inherited her late mother's flat in 2018, valued at £180,000 at probate. She let it for six years and sells in May 2026 for £245,000. Gain: £65,000, less roughly £8,000 of allowable selling and improvement costs, leaving a chargeable gain of £57,000. After her £3,000 annual exempt amount, taxable gain is £54,000. As a higher-rate taxpayer, Sarah owes £12,960 in CGT, payable within 60 days of completion.

Example 2: The retail share investor

James has £85,000 in a GIA across five US tech ETFs bought between 2017 and 2022. He has £42,000 of unrealised gains. Rather than rebalance in one tax year and trigger a £39,000 taxable gain, he runs a Bed and ISA programme: £20,000 of holdings into the ISA each year for four years, deliberately selecting the lots with the smallest unrealised gain first to stay inside the £3,000 annual exempt amount. By 2030 his entire portfolio sits inside ISAs and he has paid zero CGT.

Example 3: The crypto holder

Daniel bought £8,000 of Bitcoin in 2019 and £6,000 of Ethereum in 2020. By April 2026 the combined holding is worth £73,000. He realises £18,000 of gains across the tax year by selling tranches and using both his and his spouse's £3,000 annual exempt amounts (after gifting some holdings spouse-to-spouse before sale). Remaining taxable gain: £12,000, taxed at 18 percent if both are basic-rate taxpayers, costing £2,160.

What might change in the November 2026 Budget

The Treasury has reportedly modelled aligning CGT rates with income tax (a 20/40/45 percent regime), removing the "CGT uplift on death" for assets passed via inheritance, and ending the Private Residence Relief refresh during periods of letting. None of these have been confirmed, but every CGT-aware retail investor should assume the regime will tighten further rather than loosen. Acting under current rules — particularly accelerating Bed and ISA programmes and using the current £3,000 allowance year on year — remains the cautious default.