29 May 2026 · 6 min read
Key takeaways
- Your main home is usually free of capital gains tax, so most couples never face it on the home they live in.
- CGT bites on second homes and buy-to-lets, where a declaration of trust sets each owner's share of the gain.
- Married couples can move shares between them tax-free; unmarried couples cannot, so changing shares can itself trigger CGT.
- For the 2025/26 tax year the tax-free allowance is £3,000 per person, with residential gains taxed at 18% or 24%.
The short version
Capital gains tax (CGT) is a tax on the profit you make when you sell or give away a property that is not your main home. A declaration of trust matters here because it fixes each owner's share - and each of you is taxed on your own share of the gain, not the whole thing.
Your main home is usually exempt
Private Residence Relief normally means there is no CGT to pay on the home you live in as your only or main residence. So for most couples living in their own home, capital gains tax simply is not the issue. It comes into play on other property.
When CGT actually applies
You are most likely to meet CGT on a second home, a buy-to-let, or a property that was not always your main residence. In those cases, each owner pays CGT on their share of the gain, and that share is exactly what a declaration of trust sets out.
The trap that catches unmarried couples
Important if you are not married
Married couples and civil partners can transfer assets between themselves with "no gain, no loss" - no CGT on transfers between them. Unmarried couples do not get this. A gift or transfer of a share between unmarried partners is treated as a disposal at market value, which can trigger CGT. So changing the shares in your declaration of trust could itself be a taxable event. Take advice before moving shares around.
The current figures
As at the 2025/26 tax year
The tax-free allowance (the annual exempt amount) is £3,000 per person. Gains on residential property above that are taxed at 18% where they fall within your unused basic-rate band, and 24% above it. Rates and allowances change - check the current figures on gov.uk.
Worked example
An unmarried couple own a buy-to-let as tenants in common, 60/40, and sell it for a £50,000 gain after costs.
Owner A (60%) has a £30,000 gain. After the £3,000 allowance, £27,000 is taxable.
Owner B (40%) has a £20,000 gain. After the £3,000 allowance, £17,000 is taxable.
Each then pays 18% or 24% on their taxable gain depending on their own income. This is a simplified illustration - real calculations include buying and selling costs, money spent on improvements, and any reliefs, so get advice.
How your records help
Money spent on capital improvements adds to the property's "base cost", which reduces the taxable gain. So keeping evidence of what you spent improving the property can genuinely lower a future CGT bill - another reason a tidy record of contributions pays off.
Frequently asked questions
Do I pay capital gains tax on my main home?+
Usually no. Private Residence Relief normally exempts the home you live in as your only or main residence.
Do unmarried couples pay CGT when transferring a share of a property?+
They can. Unlike married couples, transfers between unmarried partners are treated as disposals at market value, which may trigger capital gains tax.
Does a declaration of trust reduce capital gains tax?+
Not directly. It sets each owner's share, and each person is taxed on their share of the gain. It is about ownership, not a tax-saving device.
What is the capital gains tax allowance?+
For the 2025/26 tax year it is £3,000 per person. Residential gains above that are taxed at 18% or 24%. Check gov.uk for the current year's figures.
This article is general information about the law in England and Wales, not legal or tax advice. Tax rules and figures change and depend on your circumstances - speak to a qualified tax adviser or solicitor.
TrustBadger keeps a timestamped, solicitor-ready record of every contribution you and your co-owner make to your shared home. 14-day free trial, no card needed. Start your trial.
