What is the annual exempt amount?
The annual exempt amount is the tax-free allowance for Capital Gains Tax. For the 2026 to 2027 tax year it is £3,000 per person, so joint owners each have their own allowance. Selling properties in different tax years can mean using more than one year's allowance.
Read more in our guide: Capital Gains Tax when selling rental property
Key facts at a glance
| Item | 2026 to 2027 |
|---|---|
| Annual exempt amount for individuals | £3,000 |
| Annual exempt amount for most trustees | £1,500 |
| Personal representatives of someone who has died | £3,000 in the tax year of death and the next two tax years |
| Can unused allowance be carried forward? | No, it is lost at the end of each tax year |
| Can spouses share or transfer it? | No, each person has their own |
| Available to limited companies? | No, companies pay Corporation Tax on gains |
How the Annual Exempt Amount Works
The annual exempt amount (AEA), often called the CGT allowance, is the slice of your total net gains in a tax year that is free of Capital Gains Tax. It is deducted after any losses for the same year have been set against your gains. Only the gain above the allowance is taxed, at 18% or 24% for residential property depending on your basic-rate band.
The allowance is per person and per tax year (6 April to 5 April). It applies to all your gains together, not to each property, so a landlord who sells three houses in one tax year still has only one £3,000 allowance.
How the Allowance Has Shrunk
The allowance has been cut by three quarters in a few years, which has increased the tax on every property sale:
| Tax year | Annual exempt amount | Tax saved for a higher-rate landlord* |
|---|---|---|
| 2020 to 2023 | £12,300 | £3,444 (at 28%) |
| 2023 to 2024 | £6,000 | £1,680 (at 28%) |
| 2024 to 2025 onwards | £3,000 | £720 (at 24%) |
*Value of the full allowance against residential gains at the higher residential rate for that year.
Using the Allowance When Selling a Portfolio
For a single sale the allowance makes only a modest difference, but across a portfolio and several owners it adds up:
- Joint ownership. A property owned by a couple gives two allowances, two basic-rate bands and two sets of reports. A portfolio held by four family members gives four.
- Selling over more than one tax year. A phased sale that exchanges some properties before 5 April and the rest after it uses two years' allowances per owner. Remember that the disposal date is normally the date of exchange.
- Losses come first. Losses of the same year must be set against gains before the allowance, even if that wastes some of the allowance. Losses brought forward from earlier years are only used to bring gains down to the allowance, so they are not wasted.
- Other assets. Gains on shares, a second home or a business in the same year use the same allowance.
A Worked Example
A married couple own a buy-to-let 50:50 and sell it in 2026 to 2027 with a total gain of £60,000. Each has a £30,000 share of the gain. Each deducts their own £3,000 allowance, leaving taxable gains of £27,000 each. If one owner is a higher-rate taxpayer and the other has no other income, the second owner pays 18% on their whole share while the first pays 24%. If the property had been in one name only, there would have been one £3,000 allowance and the full £57,000 taxable gain would sit on top of that person's income.
The example is illustrative only. Run your own figures with our Landlord Exit Calculator.
Common Misunderstandings
- It is not a per-property allowance.
- Unused allowance cannot be saved for a later year or given to your spouse.
- A gain covered entirely by the allowance and losses usually does not need a 60-day report, but you may still need to report it on your Self Assessment return if total proceeds of disposals are more than £50,000.
- Transferring a share to a spouse to use their allowance should be done properly and in good time, not after a buyer has been found.
Official Sources and Further Reading
General information for landlords in England, checked against official sources in October 2026. It is not tax, legal or financial advice: speak to a qualified accountant or solicitor about your own circumstances.
Frequently Asked Questions
The annual exempt amount is the tax-free allowance for Capital Gains Tax. For the 2026 to 2027 tax year it is £3,000 per person, so joint owners each have their own allowance. Selling properties in different tax years can mean using more than one year's allowance.
The annual exempt amount is £3,000 per individual for 2026 to 2027, and £1,500 for most trustees. It has been £3,000 since 6 April 2024.
Yes. Each joint owner is taxed on their own share of the gain and can deduct their own £3,000 allowance.
No. Any part of the annual exempt amount you do not use in a tax year is lost. Unused capital losses, by contrast, can be carried forward if they are reported.
No. It is one allowance per person per tax year, set against the total of all your net gains in that year.
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