What is Capital Gains Tax?
Capital Gains Tax can be payable on the gain you make when you dispose (i.e. sell, give away or swap) of a “chargeable asset” that’s worth more than you paid for it.
You only pay Capital Gains Tax on the gain, not on the asset’s total value. You report your taxable gains via the Capital Gains Tax supplementary page (SA108), which you file with your annual Self Assessment tax return (SA100).
Not all assets are subject to Capital Gains Tax. For example, you don’t pay CGT when you sell your main home or your car. Capital Gains Tax is not usually payable on gifts to your spouse, civil partner or a charity, or on gains made from ISAs and PEPs.
However, Capital Gains Tax is payable on disposal of most personal possessions worth £6,000 or more. Disposing of cryptocurrency assets can also mean you have to pay Capital Gains Tax on your gains.
Capital Gains Tax is only payable on your total gains when they go over the annual tax-free allowance, which is £3,000 per tax year or £1,500 for trusts (2024/25 tax year). You may be able to reduce your Capital Gains Tax liability by claiming tax relief.
If you make a gain from selling property (not your home), you’ll either pay Capital Gains Tax of 18% if you’re a basic-rate Income Tax payer (£12,571-£50,270 total taxable income a year) or 24% if you’re in the higher rate band (more than £50,270). Gains from selling other assets are charged at 10% (for basic rate taxpayers) or 20% (higher rate taxpayers). If you dispose of an asset you own with someone else, you both must pay Capital Gains Tax on your share of the gain.
To lower your total taxable gains and tax bill, you can report “allowable losses” on disposal of a chargeable asset to HMRC. If your total taxable gain is still higher than the CGT tax-free allowance, you can deduct losses from previous tax years that haven’t been used. If they reduce your gain to the tax-free allowance, you can carry forward the remaining losses to a future tax year.