The CGT rate you pay isn’t fixed \u2014 it depends on your total taxable income for the year. Your salary, pension income, rental income, and dividends all feed into the calculation. Getting this wrong is one of the most common errors on self-assessment returns.<\/p>\n
Your capital gains are stacked on top<\/strong> of your other income. The portion of your gains that falls within the basic rate band is taxed at 18%. Anything above is taxed at 24%.<\/p>\n The basic rate band for 2025\/26 is \u00a337,700<\/strong> (as confirmed in the HMRC rates and allowances tables<\/a>). Your personal allowance is \u00a312,570. So the basic rate threshold is \u00a350,270 of gross income.<\/p>\n The calculation:<\/p>\n 1. Start with your taxable income (salary minus personal allowance). Example 1: Comfortable within basic rate<\/strong><\/p>\n Sarah earns \u00a330,000. After the \u00a312,570 personal allowance, her taxable income is \u00a317,430. She has \u00a320,270 of basic rate headroom (\u00a337,700 \u2212 \u00a317,430). Her taxable capital gain (after \u00a33,000 exemption) is \u00a35,000.<\/p>\n The entire \u00a35,000 fits within her headroom \u2192 all taxed at 18% \u2192 \u00a3900 CGT<\/strong>.<\/p>\n Example 2: Pushed into higher rate<\/strong><\/p>\n James earns \u00a348,000. Taxable income: \u00a335,430. Basic rate headroom: \u00a32,270 (\u00a337,700 \u2212 \u00a335,430). His taxable gain is \u00a38,000.<\/p>\n First \u00a32,270 at 18% = \u00a3408.60 If James had earned just \u00a32,270 less, his entire gain would have been at 18% \u2014 saving him \u00a3343.80. This is why timing matters.<\/p>\n Example 3: Already a higher-rate taxpayer<\/strong><\/p>\n Rebecca earns \u00a365,000. She’s already above the basic rate band. Zero headroom. Every pound of capital gain pays 24%.<\/p>\n Her \u00a38,000 taxable gain \u2192 \u00a31,920 CGT<\/strong>.<\/p>\n If you’re a Scottish taxpayer, your income tax rates and bands are different (19%, 20%, 21%, 42%, etc.) \u2014 but CGT rates are the same across the UK<\/strong>. CGT is not a devolved tax. The Scottish income tax bands are only used to determine whether you’re a “basic rate” or “higher rate” taxpayer for CGT purposes. The Low Incomes Tax Reform Group<\/a> confirms this point explicitly.<\/p>\n Taxable dividends (above \u00a3500) sit between your salary and your capital gains in the stacking order. High dividends can eat into your basic rate headroom, pushing more of your gains into the 24% bracket. See our dividend tax guide<\/a> for the interaction.<\/p>\n If you’re near the basic rate boundary, timing your disposals can help:<\/p>\n Spread sales across tax years.<\/strong> Selling everything in one year might push you into 24%. Splitting the sales across two years uses two annual exemptions and keeps more gains at 18%.<\/p>\n Use your spouse’s band.<\/strong> If your spouse is a basic-rate taxpayer<\/a> or non-taxpayer, transferring assets before selling uses their lower rate.<\/p>\n Salary sacrifice into your pension.<\/strong> Pension contributions reduce your taxable income, increasing your basic rate headroom for CGT. A \u00a35,000 pension contribution could move \u00a35,000 of gains from 24% to 18%, saving \u00a3300.<\/p>\n
\n2. Add any taxable dividends above the \u00a3500 dividend allowance.
\n3. See how much of the \u00a337,700 basic rate band is left.
\n4. That leftover is your “headroom” \u2014 gains within it pay 18%.
\n5. Anything above pays 24%.<\/p>\nWorked examples<\/h2>\n
\nRemaining \u00a35,730 at 24% = \u00a31,375.20
\nTotal CGT: \u00a31,783.80<\/strong><\/p>\nScottish taxpayers<\/h2>\n
Dividends complicate things<\/h2>\n
Planning around the band<\/h2>\n