Quick Summary
- CGT rates are the same across the UK — 18% for Basic-rate taxpayers, 24% for Higher-rate taxpayers (on most assets), but your Scottish income band determines which rate applies
- Annual exempt amount is £3,000 — down from £6,000 in 2023/24 and £12,300 in 2022/23, making tax-efficient wrappers more important than ever
- Scottish taxpayers may pay the higher CGT rate sooner — because Scotland's Higher rate starts at £43,663 vs England's £50,271, your unused basic rate band for CGT purposes may be smaller
- Use our free calculator — the Scottish Income Tax Calculator shows your income tax position, which determines your CGT rate
Capital Gains Tax is not devolved to Scotland — HMRC administers it and the rates are identical across the UK. But there's a catch: your CGT rate depends on your income tax band, and Scottish income tax bands are different from England's. This means two people on the same salary can pay different CGT rates depending on where they live.
Quick Answer: Scottish taxpayers pay CGT at 18% (Basic rate) or 24% (Higher rate) on most assets — the same rates as England. However, because Scotland's Higher rate starts at £43,663 (vs £50,271 in England), a Scottish taxpayer on £45,000 may pay 24% CGT while an English taxpayer on the same salary pays 18%. The annual tax-free allowance is £3,000 for 2026/27. Residential property CGT is 18% or 24%. Use our Scottish Income Tax Calculator to check your band.
CGT rates for 2026/27
| Asset type | Basic-rate taxpayers | Higher-rate taxpayers |
|---|---|---|
| Most assets (shares, funds, personal possessions) | 18% | 24% |
| Residential property (not your main home) | 18% | 24% |
| Carried interest | 32% | 32% |
These rates are the same whether you live in Scotland, England, Wales, or Northern Ireland. CGT is a reserved tax — the Scottish Parliament has no power to change it.
The £3,000 annual exempt amount
Everyone gets a tax-free CGT allowance of £3,000 per year. This has been slashed from £12,300 just two years ago:
| Tax year | Annual exempt amount |
|---|---|
| 2022/23 | £12,300 |
| 2023/24 | £6,000 |
| 2024/25 | £3,000 |
| 2026/27 | £3,000 |
The dramatic reduction makes ISAs and pensions much more important for sheltering investment growth from CGT.
How your Scottish tax band affects CGT
Here's where Scotland diverges. Your CGT rate depends on whether your total taxable income plus capital gains falls into the Basic rate band or above it.
For CGT purposes, HMRC uses a combined UK basic rate band that runs from £12,571 to £50,270. But the question is how much of that band is "used up" by your income.
Worked example: £45,000 salary, £20,000 capital gain
Step 1: Taxable income = £45,000 - £12,570 (PA) = £32,430
Step 2: Basic rate band remaining = £50,270 - £12,570 - £32,430 = £5,270
Step 3: Gain after exempt amount = £20,000 - £3,000 = £17,000
Step 4: First £5,270 of gain taxed at 18% = £948.60. Remaining £11,730 at 24% = £2,815.20
Total CGT = £3,764
This calculation is the same whether you live in Scotland or England. The CGT basic rate band is always £12,571-£50,270, regardless of Scottish income tax bands. However, Scottish taxpayers on this salary are already paying 42% income tax on part of their earnings — the combined burden of 42% income tax plus 24% CGT on gains makes tax-efficient investing more urgent.
The practical Scotland difference
While the CGT calculation itself uses UK-wide bands, Scottish taxpayers face a higher overall tax burden at the same salary level. A Scottish taxpayer earning £48,000 pays:
- Income tax: ~£8,174 (Scottish rates with 42% Higher rate)
- An English taxpayer on £48,000 pays: ~£7,086 (English rates, still in Basic 20%)
If both also have a £10,000 capital gain, they pay identical CGT. But the Scottish taxpayer has already paid £1,088 more in income tax, so the total tax burden is higher. (Our Scotland vs England Tax Calculator shows the cross-border gap at any salary level.)
Try it yourself
Calculate your exact CGT bill at 2026/27 rates — enter your gain, income, and asset type.
Open Scottish Capital Gains Tax CalculatorNo sign-up required.
When you pay CGT
You owe CGT when you dispose of an asset — sell it, give it away, swap it, or receive compensation for it. Common triggers:
- Selling shares or funds outside an ISA or pension
- Selling a buy-to-let or second property
- Selling a business
- Giving away an asset worth more than £3,000
What's exempt from CGT
- Your main home (Principal Private Residence relief)
- ISA and pension investments
- Personal possessions worth under £6,000 each
- UK government bonds (gilts)
- Gifts to your spouse or civil partner
- Gains up to the £3,000 annual exempt amount
Agricultural and business assets: what's NOT exempt from CGT
A common misconception among Scottish farming families is that Agricultural Property Relief (APR) and Business Property Relief (BPR) cover Capital Gains Tax. They don't — APR and BPR apply only to Inheritance Tax. If you sell farmland, business premises, or other business assets during your lifetime, CGT applies at the standard 18% or 24% rates.
Rollover relief for business assets
If you sell a qualifying business asset and reinvest the proceeds in a new business asset, you can defer the CGT through rollover relief. This is particularly relevant for Scottish farmers restructuring their holdings — for example, selling one parcel of farmland and buying another. The gain is "rolled over" into the new asset's base cost, deferring the tax until the replacement asset is eventually sold.
Qualifying assets include land and buildings used for trade, fixed plant and machinery, and goodwill (for disposals before 2019).
Business Asset Disposal Relief (BADR)
If you sell all or part of a qualifying business, BADR gives a reduced CGT rate of 18% (up from 10%, changed in the Autumn Budget 2024) on the first £1 million of qualifying lifetime gains. This applies to sole traders, business partners, and directors selling shares in their trading company. For Scottish farmers selling a farm as a going concern, BADR can significantly reduce the CGT bill compared to the standard 24% Higher rate.
The interaction with IHT planning
From April 2026, the new £2.5M cap on APR/BPR for IHT is prompting many Scottish landowners to consider lifetime transfers of agricultural property. Be aware that lifetime transfers can trigger CGT — even gifts are treated as disposals at market value. Holdover relief may be available for gifts of business assets, deferring the CGT until the recipient sells. Careful planning with both IHT and CGT in mind is essential.
CGT on property for Scottish taxpayers
If you sell a residential property that isn't your main home — a buy-to-let, second home, or inherited property — you pay CGT at 18% or 24%.
Important: You must report and pay CGT on UK property sales within 60 days of completion. This is different from other assets, where CGT is reported through your Self Assessment tax return.
Worked example: selling a Scottish buy-to-let
- Purchase price: £180,000
- Sale price: £230,000
- Capital gain: £50,000
- Deduct improvement costs (new kitchen): £8,000
- Deduct selling costs (legal, estate agent): £4,000
- Net gain: £38,000
- Deduct annual exempt amount: £3,000
- Taxable gain: £35,000
If you're a Higher-rate Scottish taxpayer (most BTL landlords are, once rental income is added to employment income):
- CGT at 24%: £8,400
You'd report and pay this within 60 days of the sale via HMRC's online service.
Strategies to reduce CGT
Use your annual exempt amount every year
If you hold investments outside an ISA, sell enough each year to crystallise £3,000 of gains tax-free. Then repurchase inside your ISA ("bed and ISA"). Over time, this shifts your portfolio inside the tax-free wrapper.
Transfer to your spouse before selling
Transfers between spouses are CGT-free. If one partner is a Basic-rate taxpayer and the other is Higher-rate, transfer the asset to the lower earner before selling to pay 18% instead of 24%. This is legal and widely used.
Offset losses against gains
Capital losses can be set against gains in the same tax year, or carried forward indefinitely. If you have investments that have fallen in value, selling them crystallises a loss you can use to reduce CGT on future gains.
Use pension contributions to reduce your income
If a capital gain would push you from the Basic rate into the Higher rate for CGT purposes, a pension contribution reduces your taxable income — potentially keeping you in the 18% CGT band. This strategy works in the same tax year as the gain.
Try it yourself
Work out whether your gain falls in the 18% or 24% band — and how pension contributions can reduce your CGT rate.
Open Scottish Capital Gains Tax CalculatorNo sign-up required.
Reporting and payment deadlines
| Asset type | Reporting deadline | Payment deadline |
|---|---|---|
| UK residential property | 60 days after completion | 60 days after completion |
| All other assets | 31 January after the tax year | 31 January after the tax year |
Property CGT must be reported and paid quickly — miss the 60-day deadline and you'll face penalties and interest. Use HMRC's "Report and pay Capital Gains Tax on UK property" service online.
For other assets (shares, funds, etc.), report through your Self Assessment tax return. If you don't normally complete Self Assessment, you'll need to register with HMRC.
Frequently Asked Questions
Does Scotland set its own CGT rates?
No. Capital Gains Tax is reserved to the UK Government. The rates (18% and 24%) are identical whether you live in Scotland, England, Wales, or Northern Ireland. Only income tax and LBTT are devolved to Scotland.
Do I pay CGT when I sell my home?
No — your main residence is exempt from CGT through Principal Private Residence (PPR) relief. This applies automatically if the property has been your only or main home throughout ownership. If you've let part of it or been away for periods, partial relief may apply.
Can I offset my CGT losses against my income tax?
Generally no — capital losses can only be set against capital gains, not income. The exception is losses on shares in qualifying trading companies (under EIS or SEIS), which can be offset against income tax.
My spouse and I both have £3,000 CGT allowances — can we use both?
Yes. Each person has their own £3,000 annual exempt amount. If you jointly own an asset, each of you can use your allowance against your share of the gain. You can also transfer assets between spouses CGT-free before selling to make best use of both allowances.
What if I make a capital gain and a capital loss in the same year?
Losses are automatically offset against gains. If you have £15,000 of gains and £8,000 of losses, your net gain is £7,000. After the £3,000 exempt amount, you'd pay CGT on £4,000. If losses exceed gains, the excess carries forward to future years.
Related Articles
- Tax-Efficient Investing in Scotland — ISAs, pensions, and VCTs to shelter from CGT
- Stocks & Shares ISA Guide — invest CGT-free inside an ISA
- Buy-to-Let Tax Scotland — CGT on property plus LBTT and income tax
- Scottish Income Tax Rates 2026/27 — the rates that determine your overall tax burden
- Mortgage Overpayment vs Investing Calculator — should you overpay or invest the gains?
- Buy-to-Let Calculator — model rental yields, Section 24, and CGT on disposal
- ISA vs SIPP Calculator — compare the two main CGT-free wrappers
This article is for informational purposes only and does not constitute financial, tax, or legal advice. Tax rates and thresholds can change — always verify current rates with Revenue Scotland, HMRC, or mygov.scot, and speak to a qualified financial adviser for advice specific to your circumstances.
Sources: HMRC — Capital Gains Tax rates, HMRC — CGT annual exempt amount, HMRC — Report and pay CGT on property, HMRC — CGT for married couples
