Use our free Capital Gains Tax calculator to estimate your CGT liability for the 2026/27 tax year. Designed for UK contractors, company directors, investors and landlords, the calculator supports current HMRC CGT rates, Business Asset Disposal Relief (BADR), MVL scenarios, and the £3,000 annual tax-free allowance.
| Tax Band / Allowance | Amount | Rate | Tax Due |
|---|
This calculator provides an estimate based on the following general assumptions:
Important: This calculator assumes that any disposal selected as a "Qualifying Business Disposal (BADR / MVL)" satisfies the HMRC conditions for Business Asset Disposal Relief. These conditions typically include holding at least 5% of the company shares and voting rights, being an employee or office holder of the company, and meeting the minimum ownership period requirements. The calculator also assumes a lifetime BADR limit of £1 million. Professional advice should be sought to confirm eligibility.
Capital Gains Tax (CGT) is a UK tax applied to the profit you make when you sell, gift, or dispose of an asset that has increased in value. It is important to note that you are taxed only on the gain (the profit), not the total amount of money you receive from the sale.
This calculator is specifically designed to assist:
The UK Autumn Budget in October 2024 completely overhauled the Capital Gains Tax landscape. Rates were aligned, allowances were frozen, and relief structures were placed on an escalating schedule. Manually calculating your exposure across different tax bands and taking into account the £3,000 exemption limit is complex. This tool does the heavy lifting, giving you an immediate estimate of your tax liabilities under the current legislation.
The Chancellor announced significant changes to CGT rates, aligning the rates for standard assets (like shares) with the rates previously reserved only for residential property, and setting a staged increase for Business Asset Disposal Relief (BADR).
| Asset & Relief Type | 2024/25 (Post-Oct 30) | 2025/26 | 2026/27 (Current) |
|---|---|---|---|
| Basic Rate (Standard Assets & Property) | 18% | 18% | 18% |
| Higher Rate (Standard Assets & Property) | 24% | 24% | 24% |
| Business Asset Disposal Relief (BADR) | 10% | 14% | 18% |
Capital Gains Tax is inherently linked to your standard Income Tax band. HMRC essentially places your capital gain "on top" of your regular gross income (salary, dividends, interest) to determine what rate of tax you pay.
If your regular gross income is below the Higher Rate threshold (£50,270 assuming a standard personal allowance), you have some "Basic Rate band" remaining. Any capital gain that fits into this remaining space is taxed at 18%. The moment your combined income and gain cross that £50,270 threshold, the remainder of the gain spills over into the Higher Rate band and is taxed at 24%.
You do not pay Capital Gains Tax on all disposals. Common exemptions include:
How and when you pay your CGT depends on what you sold:
For many IT contractors and limited company directors, one of the biggest financial decisions is whether to extract company profits as dividends or as a capital gain through a Members' Voluntary Liquidation (MVL).
Dividend Tax applies when profits are distributed from a limited company during normal trading. Capital Gains Tax (CGT), on the other hand, may apply when a solvent company is formally closed and retained profits are extracted as capital rather than income.
Where Business Asset Disposal Relief (BADR) applies, qualifying gains can be taxed at a reduced Capital Gains Tax rate. This can make an MVL significantly more tax-efficient than taking large dividends, particularly for contractors with substantial retained profits.
| Factor | Dividend Tax | Capital Gains Tax (via MVL) |
|---|---|---|
| How profits are extracted | Ongoing dividend payments | Company closure and capital distribution |
| Tax treatment | Treated as income | Treated as a capital gain |
| Typical contractor use case | Regular income extraction | Closing a solvent limited company |
| Potential tax efficiency | Can become expensive at higher income levels | May be more tax-efficient if BADR applies |
| Requires company closure? | No | Yes |
HMRC has strict anti-avoidance rules around “phoenixing”, where a company is closed primarily to obtain a tax advantage before a substantially similar business is restarted. Contractors considering an MVL should always seek professional advice before proceeding.
Capital Gains Tax calculations can quickly become complicated, particularly when company closures, share disposals, or multiple investments are involved. Some of the most common mistakes contractors make include:
Because CGT rules frequently change through Budgets and Finance Acts, contractors should review the latest HMRC guidance or speak with a qualified accountant before making significant financial decisions.
Keeping accurate records is essential when calculating and reporting Capital Gains Tax. HMRC may ask you to provide evidence supporting your calculations, purchase costs, and disposal proceeds.
You should normally retain records for at least five years after the 31 January submission deadline of the relevant tax year if you submit a Self-Assessment tax return.
Examples of records you should keep include:
Good record keeping not only helps support your tax return but also makes future calculations far easier if you dispose of additional assets later.
Disclaimer: This calculator is for illustrative guidance only and does not constitute formal tax or financial advice. We strongly recommend consulting a certified accountant to review your personal circumstances before filing a return.