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Who pays Capital Gains Tax? A guide to UK rules and thresholds

HMRC reported more than £24 billion in Capital Gains Tax (CGT) in the 2024-25 tax year, but not all assets are subject to it. To find out if you need to pay CGT on your assets, we look at current rules and thresholds. 

Updated: 16.10.26

By Lisa Smith

This content was factually correct when written but may not reflect current developments or information.

Capital gains tax

What is Capital Gains Tax (CGT)? 

Capital Gains Tax is a tax you pay on the profit you make when you ‘dispose of’ or sell something that has increased in value.  

In other words, you only pay CGT on the amount you gain, not the total you sell it for; for example: 

  • You buy a piece of art for £5,000 and sell it for £20,000. 

  • Your gain is £15,000 (£20,000 minus £5,000). 

  • Deduct any allowable losses on assets that you have disposed of previously. 

  • Deduct any allowable acquisition and disposal costs. 

  • Apply your annual exemption. 

  • Once you have deducted any of the above available allowances and deductions, you will pay CGT on the remaining value. 

When it comes to CGT, ‘dispose of’ means: 

  • Selling something 

  • Giving something away as a gift or transferring ownership to someone else 

  • Swapping something 

  • Getting compensation for something could be seen as a disposal, for example, receiving a payout from an insurance claim for a lost or damaged item which would’ve ordinarily been charged to CGT if sold.  

Not everything you dispose of will have CGT apply, as some assets are tax-free. There is also a tax-free allowance, so you won’t pay CGT if your gains are below this.  

The amount of CGT you pay depends on the type of assets you dispose of and whether you usually pay the basic rate or higher rate of Income Tax. Broadly, if when added to your income in the tax year, your gains fall into the basic rate, you’ll be charged 18% on your gains. If you pay the higher rate, CGT is 24%. A gain can also fall across both of these tax rates. You can check GOV.UK for up-to-date CGT rates.  

Who pays Capital Gains Tax in the UK? 

Those potentially liable for CGT  include individuals, trustees, sole traders, and partners, UK residents selling overseas assets, and non-UK residents selling UK assets. Companies normally pay Corporation Tax on capital gains instead. 

You only pay Capital Gains Tax on ‘chargeable assets’ such as:  

  • Personal possessions worth £6,000 and above (except for your car). 

  • Property that is not your main home.  

  • Your main home if it is being let, used for business, or very large (more than 5,000 sq. metres total). There is also potential for CGT if you have large grounds. Homes normally qualify for full Private Residence Relief, but in these cases they may not; it does not necessarily mean the full gain is taxable. 

  • Shares that are not in an ISA (Individual Savings Account).  

  • Business assets.  

What is exempt from paying CGT? 

You don’t need to pay CGT on: 

  • ISAs 

  • UK government gilts  

  • Premium bond winnings 

  • Betting, lottery, or pool winnings 

If you give something to your spouse, civil partner, or a charity, you usually don’t need to pay CGT. 

CGT and cryptocurrency 

If you dispose of cryptocurrency, you may need to pay CGT, depending on your tax-free allowance and any deductible costs. You can find more detailed advice about CGT and cryptocurrency at GOV.UK.  

What is the tax-free allowance? 

If you have chargeable assets, you may only need to pay CGT if your total gains are more than your annual tax-free allowance (known as the ‘annual exempt amount’). However, this is a complex area, and advice is often required to understand how the rules might apply to you. 

Currently, the annual exempt amount is £3,000 for individuals or £1,500 for trusts. However, if more than one trust has been set up by the same settlor, this amount will be reduced. It means you’ll only pay CGT if your total gains are more than this within a single tax year (6 April to 5 April). 

The annual exempt amount has remained unchanged since it was reduced to £3,000 in 2024. This, coupled with Inheritance Tax (IHT), means that more families need to consider intergenerational wealth management and how best to pass on assets to the next generation. For more information about our personal financial planning services or to speak to one of our independent financial advisers, call 01603 967967.   

How do I know if I have to pay?

You can work out if you need to pay Capital Gains Tax and how much, by: 

  1. Calculate the gain for each asset you’ve sold or ‘disposed of’ in the tax year. For joint assets, you only need the amount you gain from your share.  

  1. Add together the gains from each asset. 

  1. Deduct any allowable losses (for example, if an asset loses value). The rules around this are complex and often need advice. 

  1. Apply the allowance.  

CGT will apply to any value left after you have made this calculation.  

You can find a complete guide to calculating CGT at GOV.UK. 

HMRC deadlines for property and other assets 

There are strict timelines for reporting any capital gains: 

Reporting CGT if you sell a property  

If you sold property in the UK, you must generally report and pay CGT within 60 days of the sale’s completion. However, deadlines can differ for certain assets and for non-UK residents. If you don’t report and pay on time, you can be charged interest and may also pay a penalty.  

Reporting CGT for other assets 

You can report CGT for other assets in your self-assessment tax return. This will tell you how much you owe, when and how to pay.  

You can also report gains by using the CGT reporting service. If you use this service, you must report your gain by 31 December of the following tax year and pay by 31 January. 

Be aware that HMRC has invested considerable resources into checking CGT, and investigations increased by more than a quarter last year, collecting over £260 million in underpaid tax.  

FAQs 

Does everyone have to pay Capital Gains Tax? 

No. You only pay CGT on chargeable assets (such as a second home or some possessions over £6,000). You also don’t usually pay CGT on assets you give to your spouse, civil partner, or a charity.  

Can I transfer assets to my spouse tax-free?  

Generally, yes, you can transfer assets to your spouse or civil partner without paying CGT. This moves the gain to your spouse, rather than eliminates it.  

What happens if I forget to declare capital gains?  

If you forget to pay CGT, you can be charged interest and given a penalty. You may also face an investigation by HMRC.  

Financial planning and wealth management expertise 

Asset management can become complex as you navigate Inheritance Tax and Capital Gains Tax, particularly if you’re concerned about conserving wealth for future generations.  

At Alan Boswell Group, our wealth management services take a holistic view of your financial circumstances, from savings and investments through to retirement planning.

The value of investments and any income from them can go down as well as up and you might not get back the original amount invested. The past is not a guide to the future. The value of tax benefits depends on your individual circumstances. Tax laws can change.

Speak to one of our wealth management experts today.

Find out how a personalised approach to wealth management could benefit you. Our independent advisers focus on a holistic approach to suit your needs without restrictions on the products or funds we recommend. 

Speak to us:  01603 967967

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