23rd June 2025

What you need to know about Capital Gains Tax Allowance and how it affects you

With rule changes introduced over the past few tax years, it’s more important than ever for property owners, particularly landlords and second-home owners, to stay up to date with changing regulations around Capital Gains Tax. This financial year brings rate adjustments, which means this tax is becoming a larger concern for property investors.

In this blog, we explain what the capital gains tax allowance 2025/26 looks like, what the capital gains tax rates for 2025 are, and how the latest changes could impact you.

What is Capital Gains Tax?

The Government describes Capital Gains Tax as “a tax on the profit when you sell (or ‘dispose of’) something (an ‘asset’) that’s increased in value.”  This means that you get taxed only on the profit you make, not the total amount of money you receive. 

For example, if you bought a property for £45,000 and sold it later for £145,000, you’ve made a gain of £100,000 (£145,000 minus £45,000), and you would be taxed on that £100,000. However, this rule only applies on properties that are NOT your main home, or if your home has been let out, used for business purposes, or is very large. You will NOT pay capital gains on your main residence when you sell it, so long as it doesn’t fall under those three caveats.

What is the Capital Gains Tax Allowance for 2025/26?

For the 2025/26 tax year, the annual exemption for this tax for individuals remains at £3,000. This means that any capital gains below this threshold will not be subject to tax. Trusts receive a reduced exemption of £1,500.

This allowance isn’t likely to be of any benefit to those looking to sell a second property, unless it is being sold for around the same value you bought it for. For example, buying a property for £150,000 and selling it for £152,500 means you won’t have to pay capital gains tax.

This is a significant drop compared to just a few years ago. As recently as the 2022/23 tax year, individuals could claim an annual exempt amount of £12,300. That figure was halved in 2023/24, and then reduced again to £3,000 in 2024/25, where it now remains for 2025/26. With no new increase in sight, more people selling assets, and particularly property investors in particular, will now find themselves liable to pay capital gains tax.

What are the tax rates?

The amount of tax you pay will depend on your tax bracket. From 6 April 2025, the standard Capital Gains Tax rates are as follows:

If you’re a higher rate tax payer, you’ll pay:

• 24% on your gains from residential property
• 32% on your gains from ‘carried interest’ if you manage an investment fund
• 24% on your gains from other chargeable assets.

If you’re a basic rate tax payer, you’ll pay:

• 18% on your gains from residential property
• 32% on your gains from ‘carried interest’ if you manage an investment fund
• 18% on your gains from other chargeable assets.

Trustees or personal representatives of someone who’s died from 6 April 2025 will pay:

• 24% on residential property
• 24% on other chargeable assets
• Personal representatives of someone who’s died pay 32% on carried interest.

Importantly, this rate structure now applies equally to residential and non-residential property, after changes removed the previous 28% residential property rate.

In addition, those qualifying for Business Asset Disposal Relief will pay Capital Gains Tax at 14% from April 2025. However, this is set to increase to 18% from April 2026, meaning business owners planning to sell should consider timing carefully to avoid a higher rate next year.

The impact of these Capital Gains Tax changes 

The combination of a much lower tax-free allowance and higher rates of tax has made this more worrying than it was just a few years ago. For example, someone making a £12,000 gain in 2025/26 would only be able to shelter £3,000 from tax, leaving £9,000 taxable. If they fall within the basic-rate band, their bill would be £1,620. A higher-rate taxpayer would owe £2,160 on the same gain.

Before the exemption was reduced, much of this gain might have fallen within the tax-free limit. Now, far more people, even casual investors or landlords selling a single property, need to factor this tax into their financial plans.

Securing a fast sale by auction

In light of these changes, it’s also important to consider what method you’ll use to sell your property. Estate agent sales on the open market can often take several months to complete, with the added risk of deals falling through at any stage. In contrast, selling via auction provides a faster, more reliable route to completion as when the auctioneer’s hammer falls, a legally binding contract is instantly formed, and completion is typically set for just 30-60 days later. This means that if you sell a property in January you could exchange contracts, hand over the keys, and receive the proceeds before the end of March, and before any new changes come into effect. Additionally, auctions are not only for properties in need of refurbishment or vacant lots. A wide range of properties can be successfully sold at auction, including vacant or tenanted residential homes, development land, mixed-use units, and commercial premises.

Selling with SDL Property Auctions

We successfully handle hundreds of residential, commercial, and development land sales each month. Our clients include private individuals and corporate sellers who value a fast, efficient, and hassle-free selling process.

We provide multiple flexible options for buying and selling properties including:

• Live Auction Events: Hosted from our head office auction studio, these events feature a live auctioneer and are broadcast online. Bidders can participate remotely via telephone, online, or proxy bidding.

• Timed Auctions: Available every day of the year on our website, these auctions allow lots to be open for bidding 24/7, starting and ending at a time convenient to the seller. Buyers can place bids instantly at any time.

Contact or call our friendly team today on 0800 046 5454 to find out how we can help you sell by auction, and we’ll help you through every step of the way to secure a good return on your sale, quickly and efficiently.