Glossary
What is Capital Gains Tax?
Capital Gains Tax is the tax you pay on the profit when you sell an asset — such as shares or a second home — that has risen in value.
How it works
You only pay CGT on the gain, not the whole sale price, and only above a tax-free allowance of £3,000 (2025/26). The rate depends on your income and the asset: for most assets it is 18% within your remaining basic-rate band and 24% above. Your main home is normally exempt.
Why it matters now
The Greens would tax gains at income-tax rates (20/40/45%); the Lib Dems would introduce standalone 20/40/45% bands with a £5,000 allowance. Both would raise CGT for larger gains.
Plain-English definition for general information only — not financial, legal or tax advice. Rates are 2025/26 unless stated.