![Capital Gains tax ](https://www.ritchiephillips.co.uk/images/blog/img-blog-5a.jpg) #  Capital Gains Tax and Inheritance Tax 2026/27 Explained

Whether you are selling an investment, disposing of a property, passing on wealth to the next generation or planning your estate, understanding the rules around Capital Gains Tax (CGT) and Inheritance Tax (IHT) is essential. While a range of exemptions, allowances and reliefs are available, the rules can be complex and careful planning can help minimise your tax liability. This 2026/27 guide explains the key rates, thresholds and reliefs, helping you make informed decisions and avoid unexpected tax bills.

## **Capital Gains Tax**

If you sell an asset such as property, shares or even your business, you may be liable to capital gains tax (CGT) on any profit (gain) you make. After the deduction of an ‘annual exempt amount’, you will be taxed on gains at the following rates, based on whether you have any income tax basic rate band (see above) remaining, after all of your income has been taxed:

 |  | **2026/27** | **2025/26** |
|---|---|---|
| Annual exempt amount | £3,000 | £3,000 |
| **Rate of CGT on assets other**    **than residential property and**    **qualifying business disposals:** |  |  |
| Within the basic rate band | 18% | 18% |
| Outside the basic rate band | 24% | 24% |
| **Rate of CGT on residential**    **property disposals:** |  |  |
| Within the basic rate band | 18% | 18% |
| Outside the basic rate band | 24% | 24% |
| **Rate of CGT on qualifying**    **business disposals:** |  |  |
| Business Asset Disposal Relief    (BADR) lifetime limit | £1million | £1 million |
| Rate of CGT on gains    qualifying for BADR | 18% | 18% |

**Tip**: There is a specific exemption from CGT if you sell your only or main home. However, for other property disposals, tax payment and reporting obligations can arise just 60 days after your completion date, so make sure you take advice in good time.

**Tip**: As explained for income tax, selling your unwanted possessions will not usually create a capital gain. Your personal possessions are likely to be classed as ‘chattels’ for tax purposes. There are specific rules for calculating CGT on chattels. Some, such as private cars, are exempt from CGT altogether. For other non-exempt items, there will also be no CGT consequences if the sale proceeds are less than £6,000.

Also mirroring the income tax position, any capital gains made on the disposal of stocks or shares in an Individual Savings Account are exempt from CGT.

Companies are not liable to CGT; instead, they pay corporation tax on gains arising from the disposal of capital assets.

## **Inheritance Tax**

Inheritance tax (IHT) is paid on the value of a deceased person’s estate (their property, money and possessions) that falls above the nil-rate band. The value of the deceased person's estate is computed after exempt gifts to their spouse or civil partner, or to a charity, are deducted. As such, most estates in the UK are not liable to IHT.

 |  | **2026/27** | **2025/26** |
|---|---|---|
| Nil-rate band | £325,000 | £325,000 |
| Residence nil-rate band | £175,000 | £175,000 |
| Threshold for residence nil   rate band | £2million | £2million |
| IHT rate | 40% | 40% |
| Reduced IHT rate for estates    leaving 10% or more to charity | 36% | 36% |

The residence nil-rate band is available if a deceased person leaves their home to specified family members. It is reduced by £1 for every £2 that the estate value exceeds the £2 million threshold.

On rare occasions, IHT can also apply to gifts made by a person in their lifetime. It should also be noted that certain gifts a person makes in the 7 years leading up to their death can affect the IHT calculation.

Various IHT tax reliefs are available, including for business assets. Please contact us to talk about efficient wealth planning for your family.

You can download our full, free tax rate guide here: [Ritchie Phillips Private Client Tax Rate Guide 2026/27](https://www.ritchiephillips.co.uk/about/publications/private-client-tax-rate-guide-2026-27)

This guide provides an overview of the key UK Capital Gains Tax (CGT) and Inheritance Tax (IHT) rules, rates, allowances and reliefs. It is intended as a general guide only and does not cover every aspect of the legislation or every circumstance that may affect your personal or business affairs. The tax treatment of asset disposals, gifts and estates can be complex, and careful planning is often essential to ensure reliefs and exemptions are not missed. No action should be taken based on this guide alone. [Please contact us ](https://www.ritchiephillips.co.uk/contact)before making any decisions or if you would like tailored advice on your tax planning or estate planning arrangements.