Capital Gains Tax on Investments 2026: What Every UK Investor Needs to Know
- Alpesh Patel
- Apr 13
- 3 min read
Updated: Apr 25
The October 2024 Budget changed the capital gains tax landscape for UK investors overnight. Rates went up significantly. The annual exempt amount has been cut to its lowest level in decades. For investors holding profitable positions outside a tax wrapper, the tax bill on gains just became materially larger. This post explains exactly what changed and what you need to do about it.
Capital gains tax applies when you sell an investment for more than you paid for it. Within a Stocks and Shares ISA or a SIPP, gains are completely exempt from CGT. Outside these wrappers in a general investment account (GIA) gains above the annual exempt amount are taxed at the applicable rate.
Alpesh Patel OBE is a hedge fund manager, Bloomberg TV alumnus, Financial Times author, and former Visiting Fellow at Corpus Christi College, Oxford. CGT planning is a consistent discussion point in GIP portfolio reviews for investors holding positions in general investment accounts.
The New Capital Gains Tax Rates on Investments from October 2024
Basic rate taxpayer (gains falling within basic rate band): 18% on investment gains (was 10%). Residential property: 18% (unchanged).
Higher rate taxpayer (gains above basic rate band): 24% on investment gains (was 20%). Residential property: 24% (was 28%).
Annual exempt amount 2026/27: £3,000. This is a dramatic reduction from £12,300 in 2022/23 and represents the lowest exempt amount in real terms for many years.
ISA gains: zero CGT, forever. No reporting requirement.
SIPP gains: zero CGT within the wrapper. CGT is not charged on investments held in a pension.
What This Means in Practice: A Worked Example
A higher rate taxpayer holds £100,000 of GIP Approved List stocks in a general investment account. Over 5 years those stocks have appreciated to £180,000. The gain is £80,000. After the £3,000 annual exempt amount, the taxable gain is £77,000. At 24%, the CGT bill is £18,480.
The same investor holding the same stocks in a Stocks and Shares ISA pays zero CGT on the £80,000 gain. The £18,480 difference is not a theoretical planning point. It is a real, avoidable tax bill that comes entirely from holding profitable investments in the wrong wrapper.
Practical CGT Planning for GIP Investors
Prioritise your ISA allowance for GIP stocks. The £20,000 annual ISA allowance is your primary CGT shelter. GIP investors who hold individual stocks which can appreciate significantly over 2–5 years benefit most from the ISA wrapper because gains can be very large per position.
Use the SIPP for highest-growth positions. SIPP investments are completely exempt from CGT within the wrapper. For the stocks most likely to produce the largest capital gains - the high CROCI, high PEG businesses that the GIP framework targets - the SIPP is the ideal holding environment.
Use the £3,000 annual exemption strategically. Where you hold positions in a GIA, consider realising £3,000 of gains each tax year to use the annual exemption before it lapses. Unused annual exemption cannot be carried forward.
Bed and ISA. If you hold profitable stocks in a GIA, you can sell and immediately repurchase within an ISA (subject to available allowance). The gain on the sale is taxable, but future gains on the same position grow tax-free. With only £3,000 of exempt amount available per year, spreading this over multiple tax years minimises the immediate tax cost.
For a review of your current CGT position and how to structure your GIP portfolio across ISA, SIPP, and GIA for maximum tax efficiency, book a free portfolio review here
Sources & Further Reading
HMRC — Capital Gains Tax rates, annual exempt amount, and reporting. gov.uk/capital-gains-tax/rates
HM Treasury — Autumn Budget 2024: Capital Gains Tax changes. gov.uk/government/publications/autumn-budget-2024
Financial Times — Capital gains tax changes 2024 and planning strategies for investors. ft.com/personal-finance
Disclaimer: This article is for educational purposes only. Tax rules are subject to change. This does not constitute personal tax guidance. Always verify current CGT rates and rules with HMRC or a qualified tax professional.
Alpesh Patel OBE
Comments