You sold a second home. You cashed in some shares. You made a profit on an asset. Now HMRC wants a cut. Capital gains tax (CGT) is a tax on the profit you make when you sell or dispose of an asset that has gone up in value. It is not charged on the full sale price, only on the chargeable gain. Every individual gets a £3,000 annual CGT allowance in the 2024/25 tax year, and rates go up to 24% above that. So, before you sell anything, do you actually know how much tax you could owe?
What Is Capital Gains Tax (CGT)?
Capital gains tax in the UK is a tax on the profit you make when you sell or dispose of an asset that has gone up in value. You do not pay tax on the full sale price. You only pay tax on the gain, which is the difference between what you paid for the asset and what you sold it for.
For example, if you bought shares for £5,000 and sold them for £20,000, your chargeable gain is £15,000. That gain is what gets taxed.
CGT was first introduced in 1965 to stop people from turning income into untaxed profits. Since then, the rules have changed many times. The most recent changes came in the Autumn Budget 2024.
What Assets Are Subject to Capital Gains Tax?
Not every asset triggers a CGT liability. It helps to know what is taxable and what is not. Here is a quick overview:
| Taxable Assets | Exempt Assets |
| Shares and investment funds | Your main home (with full PPR relief) |
| Second properties and buy-to-lets | ISAs and PEPs |
| Business assets | Personal cars |
| Valuables such as art, jewellery, antiques | Gifts to a spouse or civil partner |
| Cryptocurrency | Lottery and betting winnings |
| Inherited assets sold at a gain | UK government gilts |
So if you sell your main home, you are usually fine. But if you sell a second property, a share portfolio, or even crypto assets, CGT may apply.
How Much Is Capital Gains Tax in the UK? (2024/25 Rates)
Following the Autumn Budget 2024, the CGT rates were updated. The new rates apply to disposals made on or after 30 October 2024.
Every individual gets a £3,000 annual CGT allowance for the 2024/25 tax year. Any gain above that allowance is taxed based on your income tax band.
| Tax Band | CGT Rate (2024/25) |
| Annual allowance (up to £3,000) | 0% |
| Basic-rate taxpayer | 18% |
| Higher/additional-rate taxpayer | 24% |
| Residential property (all rates) | 18% / 24% |
You cannot carry your annual allowance forward. Use it or lose it each tax year. That is why good CGT tax planning matters so much.
When Do You Have to Pay Capital Gains Tax?
For most taxable gains, you report and pay through your annual Self Assessment tax return. This covers individuals, sole traders, and business owners across the UK.
However, there is one important exception. If you sell a residential property that is not your main home, you have just 60 days from completion to report the gain and pay any tax owed to HMRC. Missing this deadline means late payment penalties. Getting professional help with CGT Returns ensures you never miss a deadline and stay fully compliant with HMRC.
Key CGT Reliefs and Exemptions Explained
Several reliefs can lower or remove your capital gains tax bill. Understanding them can save you a lot of money. Here are the main ones to know.
Principal Private Residence (PPR) Relief
This relief covers your main home. If you lived in the property for the full time you owned it, there is usually no CGT to pay. There is also a final period exemption of 9 months that can apply even if you rented the property out toward the end of ownership.
Business Asset Disposal Relief (BADR)
BADR is a reduced CGT rate for people selling a qualifying business. The rate is currently 14% (rising to 18% from April 2026). To qualify, you must have owned at least 5% of the business and been an employee or officer for the past two years. This relief has a £1 million lifetime limit.
Other Key Reliefs
Transitional note: Beyond PPR and BADR, there are three more reliefs worth knowing if you deal with investments or gifts.
Investors’ Relief gives a reduced CGT rate to external investors in unlisted trading companies, with a lifetime limit of £1 million. Rollover Relief lets you defer a gain when you sell a business asset and buy a replacement. Holdover Relief for Gifts means the person giving the gift does not pay CGT at the time of transfer.
How to Reduce Your Capital Gains Tax Bill
Good planning can legally reduce how much capital gains tax you pay. Here are some proven strategies.
Use your £3,000 annual CGT allowance every single year. If you do not use it, it disappears. If you are married or in a civil partnership, transfer assets between you to make use of both allowances, doubling your tax-free amount to £6,000.
You can also use the Bed and ISA strategy. This means selling investments that have grown in value and putting the proceeds into a Stocks and Shares ISA. Future growth inside the ISA is completely free from CGT.
If you have made a loss on one asset, you can offset that loss against your gains. Unused losses can even be carried forward to future tax years, as long as you report them to HMRC within four years.
Timing matters too. If you are planning to sell a business, doing so before the BADR rate increases in April 2026 could save you money.
CGT on Property, Shares, and Cryptocurrency
CGT on property is one of the most common issues our clients face. If you own a buy-to-let property or a second home, CGT applies at 18% or 24%, depending on your income tax band. You must report and pay within 60 days of completion.
CGT on shares works similarly. One thing to watch out for is the 30-day rule, sometimes called the bed and breakfasting rule. If you sell shares and buy them back within 30 days, HMRC will not allow you to reset the cost base to reduce your gain.
Crypto assets are treated as capital assets by HMRC. Selling crypto, swapping it for another coin, or using it to buy something are all treated as chargeable disposals. Your annual CGT allowance still applies, and crypto losses can be offset against other gains.
CGT and Inheritance
When you inherit an asset, there is no CGT at the point of death. You inherit the asset at its probate value, which is the market value on the date the person passed away. CGT only applies later, if you sell the asset for more than that probate value. Always record what the inherited value was. It is your starting point for any future CGT calculation.
How Vital Accountax Can Help You
Capital gains tax in the UK is not simple. Rates have changed, allowances have fallen, and the rules around property, business sales, and crypto keep evolving. Getting it wrong can mean paying too much tax or facing HMRC penalties.
At Vital Accountax, we offer a dedicated CGT Returns service to ensure your reporting is accurate and on time. Our Self Assessment service covers all personal tax obligations, and our team of experts is always on hand to advise you on CGT planning before you make a disposal.
Whether you are a landlord, an investor, a business owner, or someone who has just sold a valuable asset, we are here to make sure you pay the right amount and not a penny more. Get in touch with us today and let us handle the numbers.