The £3,000 CGT exemption: use it or lose it

Every individual can realise a certain amount of capital gains each tax year without paying a penny of capital gains tax. For 2026/27 that figure is £3,000. It applies per person, it resets on 6 April, and any part of it you do not use simply disappears.

It is one of the few tax reliefs that rewards doing something rather than nothing — and it is routinely wasted.

Why it matters more than it used to

The annual exempt amount has fallen sharply over recent years. Gains that once sat comfortably inside the allowance now produce real bills, and the number of people filing capital gains on a tax return has risen accordingly.

For an investor holding funds or shares outside an ISA, the practical effect is that a portfolio which has grown steadily for several years can quietly accumulate an unrealised gain far larger than one year's exemption can absorb.

The core idea: gains do not have to be realised all at once

Consider someone holding a fund outside a wrapper with £9,000 of unrealised gain, who wants to exit the position.

Sell it all in one tax year: £9,000 gain, minus £3,000 exemption, leaves £6,000 taxable. At 18% that is £1,080; at 24% it is £1,440.

Sell roughly a third in each of three tax years: each year's gain falls within the exemption, and the total tax is nothing. The investment sold is identical. Only the calendar changed.

This is why the days either side of 5 April carry disproportionate weight. Selling on 4 April and 7 April uses two years' exemptions; selling on 4 April and 4 May uses one.

The 30-day rule

The obvious move — sell to crystallise a gain within the exemption, then buy straight back — is specifically blocked. If you repurchase the same investment within 30 days, the disposal is matched against that repurchase, and the intended crystallisation does not achieve what you wanted.

There are legitimate routes around this, each with its own considerations: waiting more than 30 days and accepting the market risk in between, buying a similar but not identical investment, or repurchasing inside an ISA, where the matching rule does not bite in the same way. That last route is common enough to have its own name.

The reporting threshold people miss

Owing no tax and having nothing to report are not the same thing. Even where the gain falls inside the £3,000 annual exempt amount, a Self Assessment return may still be required if total proceeds from disposals in the tax year exceed four times the exempt amount — £12,000 for 2026/27.

That catches people who sold a reasonable amount but made very little on it. The gain was small; the proceeds were not.

Losses count too

Capital losses in the same tax year are automatically set against gains before the exemption is applied. Unused losses can be carried forward indefinitely — but generally only if you have reported them, which for many people means a tax return in a year when no tax was actually due.

A loss you never reported is a relief you may not be able to use later.

What this means in practice

Three questions are worth answering every year, ideally well before March:

1. How much unrealised gain is sitting in my accounts outside an ISA?
2. How much of this year's £3,000 have I already used?
3. Is there a disposal that makes sense on its own merits, which also uses the remaining exemption?

The third question matters most. Tax should shape when and how much, not whether — decisions driven purely by a tax deadline have a way of looking poor a year later.

Try it: our free capital gains tax calculator shows how a disposal sits against this year's exemption.

Sources

• HM Revenue & Customs — Capital Gains Tax rates and allowances, accessed August 2026.
• HM Revenue & Customs — Capital Gains Manual: share matching rules, accessed August 2026.
• HM Revenue & Customs — Report and pay Capital Gains Tax, accessed August 2026.

Last reviewed: 2 August 2026 · Figures reflect the 2026/27 UK tax year.

This article is general educational information about UK tax and investing rules. It is not personal advice or a recommendation, and it does not take account of your circumstances. Tax treatment depends on individual circumstances and may change. Figures reflect our understanding of the rules for the 2026/27 tax year at the date of publication. If you are unsure, consider speaking to an adviser authorised by the FCA.