Capital Gains Tax in the United Kingdom
Reviewed by the Commoner Law Editorial Team. Sourced from UK Acts of Parliament, statutory instruments, and official guidance. Written in plain language for general understanding — this is educational content, not legal advice. Our editorial standards
What is this right?
Capital Gains Tax (CGT) hits the profit you make when you sell — or "dispose of" — an asset that has gone up in value. It catches:
- Property that isn't your main home (buy-to-lets, second homes, inherited houses you never lived in)
- Shares and investments outside ISAs or pensions
- Business assets on sale or disposal
- Personal possessions worth over £6,000 — jewellery, art, antiques
The Annual Exempt Amount — the slice of gains you can take CGT-free each year — has been slashed in successive Budgets: from £12,300 in 2022/23 to £6,000 in 2023/24, then to £3,000 from 2024/25 onwards (still £3,000 for 2025/26). CGT now bites for far smaller transactions than it used to.
From 30 October 2024 the rates moved upward: most gains are taxed at 18% (basic rate band) or 24% (higher/additional rate band). Residential property uses the same 18% / 24% split. Your gain stacks on top of your other income to determine which band applies — so a single big disposal can push you into the higher rate even if you usually pay basic.
When does it apply?
- You sell an asset for more than you paid for it (after deducting costs like solicitor fees, improvement costs, etc.).
- Your main home is exempt from CGT under Private Residence Relief — but second homes, buy-to-lets, and investment properties are not.
- Transfers between spouses or civil partners are CGT-free.
- Assets held in ISAs, pensions, or betting winnings are exempt.
What to Do If You Have Sold an Asset and May Owe Capital Gains Tax in the UK
The 60-day property rule catches more people than any other CGT trap. Set the calendar reminder before you complete.
- Sell UK residential property at a gain and you must report and pay within 60 days of completion through HMRC's online CGT service. The Self Assessment return for the year still goes in afterwards, with the property gain reconciled.
- For other assets, report through the normal Self Assessment return.
- Use the annual exempt amount each year. It doesn't roll forward — unused, it's just gone.
- Offset losses. Capital losses in the same tax year reduce gains pound for pound; unused losses carry forward indefinitely if you report them.
What should you NOT do?
- Don't miss the 60-day window. Late reporting carries penalties even if no tax is owed — and the penalties stack on the regular late-filing structure.
- Don't forget to deduct allowable costs. Solicitor fees, estate agent fees, SDLT, and improvement costs (not repairs) all reduce the chargeable gain. People routinely overpay because they only count the headline price difference.
- Don't assume gifting avoids CGT. Gifts to anyone other than your spouse or civil partner are treated as a disposal at market value — and the donor pays the tax on the gain, even though no money has changed hands.
Common Questions
When does capital gains tax apply?
You sell an asset for more than you paid for it (after deducting costs like solicitor fees, improvement costs, etc.).Your main home is exempt from CGT under Private Residence Relief — but second homes, buy-to-lets, and investment properties are not.Transfers between spouses or civil partners are CGT-free.Assets held in ISAs, pensions, or betting winnings are exempt.
What should I do if I've sold a property or investment and might owe capital gains tax in the UK?
The 60-day property rule catches more people than any other CGT trap. Set the calendar reminder before you complete.Sell UK residential property at a gain and you must report and pay within 60 days of completion through HMRC's online CGT service. The Self Assessment return for the year still goes in afterwards, with the property gain reconciled.For other assets, report through the normal Self Assessment return.Use the annual exempt amount each year. It doesn't roll forward — unused, it's just gone.Offset losses. Capital losses in the same tax year reduce gains pound for pound; unused losses ca...
What mistakes should I avoid with capital gains tax?
Don't miss the 60-day window. Late reporting carries penalties even if no tax is owed — and the penalties stack on the regular late-filing structure.Don't forget to deduct allowable costs. Solicitor fees, estate agent fees, SDLT, and improvement costs (not repairs) all reduce the chargeable gain. People routinely overpay because they only count the headline price difference.Don't assume gifting avoids CGT. Gifts to anyone other than your spouse or civil partner are treated as a disposal at market value — and the donor pays the tax on the gain, even though no money has changed hands.