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Capital Gains Tax Rates and Allowances

Capital Gains Tax on Asset Sales

Capital gains tax (CGT) is a tax you pay in the UK when you sell or dispose of certain assets for a profit. It applies to things like property (that isn’t your main home), shares, investments, and valuable items. The tax is charged on the profit (the ‘gain’) you make, not the total sale price.

This guide explains what capital gains tax is, when it applies, how to calculate it, and what allowances or reliefs you might be able to claim. Understanding CGT helps you plan ahead, report your gains correctly, and stay compliant with HMRC.

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Accounting Wise - Tax Rates and Allowances - Capital Gains Tax Rates

What is Capital Gains Tax?

Capital gains tax (CGT) is a tax you pay on the profit you make when you sell or dispose of an asset that has increased in value. It’s the gain you’re taxed on not the total amount you receive.

In the UK, CGT commonly applies to assets like property (that isn’t your main home), shares, investments, and valuable personal items. Different rates apply depending on whether you’re a basic or higher-rate taxpayer and the type of asset you’re selling.

Understanding how capital gains tax works, when it applies, and what allowances and reliefs you can claim is key to managing your tax bill and making the most of your profits.

Getting Started with Capital Gains Tax

Before you sell or give away an asset, it’s important to understand how capital gains tax might apply. Knowing what counts as a chargeable gain, how to calculate your profit, and when to report and pay CGT can help you avoid unexpected tax bills.

Make sure you know your annual CGT allowance and check if any reliefs like Private Residence Relief or Business Asset Disposal Relief can reduce what you owe. Keeping clear records of what you paid for an asset and any costs of buying, selling or improving it will make working out your gain much easier.

If you’re unsure, getting expert advice can help you plan ahead and keep more of your hard-earned profits.

Capital Gains Tax (CGT) is payable by individuals, trustees and 'personal representatives' (PRs). Companies pay corporation tax on their capital gains.

There are annual tax free allowances (the 'annual exempt amount') for individuals, trustees and PRs. Companies do not have an annual exempt amount.

For individuals net gains are added to 'total taxable income' to determine the appropriate rate of tax. The standard rate applies only to the net gains which, when added to total taxable income do not exceed the 'basic rate band'.

Gains which qualify for 'Investors' Relief' are charged at 14% (10% for 2024/25) for the first £10m of qualifying gains.

Gains which qualify for 'Business Asset Disposal Relief' are charged at 14% (10% for 2024/25) for the first £1 million.

Individuals2025/262024/25
Exemption£3,000£3,000
Standard rate18%10%1/18%
Higher rate24%20%1/24%

Note...

  1. For disposals up to and including 29 October 2024.

The higher rate applies to higher rate and additional rate taxpayers.

Additionally, the rates of 18% and 24% may have applied to the disposal of certain residential property throughout 2024/25.

Trusts2025/26
Exemption£1,500
Rate24%1

Note...

  1. 20% for disposals up to and including 29 October 2024.

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Accounting Wise - Tax Rates and Allowances - Who Qualifies for Capital Gains Tax

Who Qualifies for Capital Gains Tax?

Most UK individuals and businesses may need to pay capital gains tax when they sell or dispose of certain assets for a profit. Individuals usually pay CGT on gains from selling second properties, shares, investments, or valuable personal possessions worth over £6,000 (excluding cars).

Businesses, trusts, and personal representatives of someone who has died may also have to pay CGT in specific situations.

Your tax status, income level, and the type of asset sold will determine how much CGT you owe and which rates apply. However, not all gains are taxable your main home may be exempt, and various allowances and reliefs can reduce your bill.

Report and Pay Capital Gains Tax

Paying capital gains tax is done through your personal or business tax return, depending on who made the gain:

Individuals

If you’re an individual, you report and pay CGT through your Self Assessment tax return. You must report your gains if they’re above the annual CGT allowance or if you have gains from selling UK property. For residential property sold after 27 October 2021, you usually have 60 days to report and pay CGT separately using the online UK Property Account.

Businesses, Trusts, and Personal Representatives

If a business, trust, or estate makes a gain, CGT is usually reported through the company or trust tax return, or through the Self-Assessment return if acting as a personal representative.

What Qualifies for Capital Gains Tax

You may have to pay CGT on profits from selling or disposing of:

  • Second homes or buy-to-let properties
  • Shares and investments not held in an ISA or pension
  • Business assets, such as land or buildings
  • Personal possessions worth £6,000 or more (except cars)

Some assets, like your main home (if you meet the criteria for Private Residence Relief), certain gifts to your spouse, or assets in an ISA, are usually exempt.

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Accounting Wise - Tax Rates and Allowances - What You’ll Need To Report Capital Gains

What You’ll Need To Report Capital Gains

When reporting CGT, you’ll need:

  • Details of the asset sold (type, date acquired, date sold)
  • Sale price and original purchase price
  • Costs related to buying, improving, or selling the asset (like legal fees or stamp duty)
  • Calculations showing your gain and any reliefs claimed
  • Payment method ready to pay any tax due by the deadline

Keep Good Records

HMRC can ask for proof, so keep records like contracts, receipts, valuations, and evidence of any allowable costs. Good records help ensure you don’t pay more tax than necessary and make reporting straightforward.

Capital Gains Tax FAQs

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Capital gains tax is a tax you pay on the profit you make when you sell or dispose of an asset that has increased in value, such as property, shares, or valuable personal items.

Most individuals, businesses, trusts, and estates may need to pay capital gains tax when they make a profit on selling chargeable assets.

The capital gains tax allowance officially called the Annual Exempt Amount is £3,000 for individuals and £1,500 for most trusts for the 2025/26 tax year.

Capital gains tax on residential property must be reported and paid within 60 days of selling. For other gains, it’s usually paid through Self Assessment by 31 January after the tax year ends.

To work out your capital gains tax, subtract the original purchase price and any allowable costs (like legal fees or improvements) from the sale price. Apply any losses and your annual CGT allowance, then check which CGT rate applies to you.

Capital gains tax applies to assets such as second homes, rental properties, shares (not in an ISA or pension), business assets, and valuable items worth more than £6,000, excluding cars.

You can reduce your capital gains tax by using your annual allowance, offsetting losses, and claiming reliefs like Private Residence Relief for your main home or Business Asset Disposal Relief for qualifying business sales.

You report capital gains tax through your Self Assessment tax return or by using HMRC’s online real-time reporting service. For UK property sales, you must usually report and pay within 60 days.

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