Capital Gains Tax Brackets Explained

Capital gains tax is not charged in “brackets” in the same way as income tax, but your income tax band determines which CGT rate applies. In this article we explain how capital gains tax brackets (rates) work and how gains interact with your income.

How CGT Rates Are Determined

Your taxable income (after allowances) is used to see whether you are a basic-rate or higher-rate taxpayer. Then your total taxable gains (after the CGT allowance and reliefs) are taxed at either the basic or the higher CGT rate. For very large gains, part can be taxed at the basic rate and part at the higher rate—effectively creating “capital gains tax brackets” in practice.

Rates for 2025/26

For assets other than residential property: basic rate 10%, higher and additional rate 20%. For residential property: basic rate 18%, higher and additional rate 24%. So your capital gains tax brackets depend on both your income and the type of asset you have sold.

Why It Matters

If you are near the basic-rate limit, a large gain could push you into the higher rate for part of the gain. Planning—including use of the annual allowance and losses—can help. Professional advice is recommended for significant disposals.