Guide

Capital Gains Tax for Basic-Rate Taxpayers 2026/27

Being a basic-rate taxpayer does not mean all of your capital gain is taxed at 18%. A large enough gain can push part of your total income above the basic-rate threshold, meaning that portion is taxed at 24%. This guide explains how the band split works and how to calculate your CGT as a basic-rate taxpayer.

Published by the UK Money Calculators editorial team. Last updated for the 2026/27 tax year.

How the CGT band split works

CGT is calculated by treating the gain as sitting on top of your other taxable income. Your income fills the basic-rate band first. Whatever headroom remains — the gap between your taxable income and £37,700 — absorbs gain at 18%. Any gain that exceeds that headroom is taxed at 24%.

So even a basic-rate taxpayer with a large enough gain will pay 24% on part of it. The 18% rate only applies to the portion that fits within the remaining band.

The key figures for 2026/27

  • Personal Allowance: £12,570 — income below this is free from income tax
  • Basic-rate band: £37,700 of taxable income (income above personal allowance)
  • Higher-rate threshold: £50,270 gross income (£12,570 + £37,700)
  • CGT annual exempt amount: £3,000
  • CGT lower rate: 18% (gain within remaining basic-rate band)
  • CGT higher rate: 24% (gain above basic-rate band)

Worked example

Tom earns £47,570. After the £12,570 personal allowance, his taxable income is £35,000. He sells shares making a gain of £28,000. After the £3,000 annual exempt amount, his taxable gain is £25,000.

Basic-rate band£37,700 Minus taxable income already used−£35,000 Remaining basic-rate band£2,700

Tom's £25,000 taxable gain is split:

First £2,700 at 18%£486 Remaining £22,300 at 24%£5,352 Total CGT£5,838

Tom is technically a basic-rate taxpayer on his income. But most of his CGT is at 24% because his salary leaves very little basic-rate band available for the gain.

A second example: more headroom available

Claire earns £30,000 gross. Taxable income: £17,430 (£30,000 minus £12,570 personal allowance). She sells a rental property with a £25,000 taxable gain after the £3,000 exempt amount.

Remaining basic-rate band (£37,700 − £17,430)£20,270 Gain within band at 18%£20,270 × 18% = £3,649 Remaining gain at 24% (£25,000 − £20,270 = £4,730)£4,730 × 24% = £1,135 Total CGT£4,784

With more headroom in the basic-rate band, more of Claire's gain falls at 18%.

Can pension contributions reduce CGT?

Yes, in some cases. Pension contributions reduce your taxable income, which widens the basic-rate band available to absorb gains at 18% rather than 24%.

If Tom from the example above made a £5,000 pension contribution, his taxable income would fall to £30,000, leaving £7,700 of basic-rate band. So £7,700 of his gain would be taxed at 18% instead of just £2,700. That is an extra saving of £5,000 × (24% − 18%) = £300.

This interaction matters most for larger gains. A tax adviser can model the numbers for your specific position.

Am I a basic-rate taxpayer?

You are broadly a basic-rate taxpayer if your gross income — salary, self-employment profit, rental income — is between £12,571 and £50,270. Above £50,270, you are in the higher-rate band and the full gain is taxed at 24% (unless losses or the exempt amount absorb it).

Dividend income follows different bands and rates. Scottish taxpayers also have different income tax bands. But CGT rates are set by the UK Government and apply equally across the UK.

Calculate your exact CGT split

Enter your taxable income and gain into the calculator to see exactly how much falls at 18% and how much at 24%.

Open the CGT calculator

Official sources

Frequently asked questions

Am I a basic-rate taxpayer for CGT purposes?

If your gross income is between £12,571 and £50,270, you are a basic-rate taxpayer on income. For CGT, what matters is how much of your basic-rate band (£37,700 of taxable income) is unused after your income is accounted for. The remaining headroom is the amount of gain you can tax at 18%.

Can I reduce my income to keep all my gain at 18%?

Potentially, yes. Increasing pension contributions reduces your taxable income, which widens the basic-rate band available to your gain. Gift Aid donations also extend the basic-rate band by the grossed-up donation amount. The practical scope depends on your income level, the size of the gain and timing. This is worth modelling with a tax adviser.

Does a pension contribution reduce CGT directly?

Not directly. A pension contribution reduces your taxable income, which creates more room in the basic-rate band. More of your gain then falls at 18% rather than 24%. For every £1,000 of income moved below the higher-rate threshold, £60 of CGT is saved (the 6 percentage point difference between 18% and 24%).

What if my income is already above £50,270?

If your taxable income already exceeds £37,700 (i.e. gross income above £50,270), there is no remaining basic-rate band. Your full taxable gain is charged at 24%.

Do Scottish income tax rates affect my CGT?

No. CGT is a UK-wide tax and uses UK income tax bands — not Scottish income tax bands — to determine the rate split. Scottish taxpayers use the UK basic-rate limit of £50,270 for CGT purposes, even though their income tax rates and bands differ.

This page is for general information only and is not financial, tax or legal advice. Your personal tax position depends on many factors — consult a qualified tax adviser or accountant for tailored guidance.