Capital Gains Tax UK: Rates, Allowances, and How to Calculate

Capital Gains Tax (CGT) is the tax you pay on profit when you sell or otherwise dispose of an asset that has gone up in value. It applies to shares, investment property, cryptocurrency, and other valuable assets. It does not apply to your main home, provided it qualifies for Private Residence Relief.

The figure that catches most people out is the Annual Exempt Amount (AEA). For 2024-25 it is £3,000. Two years ago it was £12,300. That cut means far more gains are now taxable, so if you have been assuming your portfolio growth falls under the threshold, check it.

The rates depend on your income tax band. Basic-rate taxpayers pay 10% on most gains, or 18% on residential property gains. Higher and additional-rate taxpayers pay 20%, or 24% on residential property. If your gains push you from the basic-rate band into the higher-rate band, the portion sitting in each band is taxed at the corresponding rate.

To cut what you owe, use your £3,000 AEA every year, because it cannot be carried forward. Transfer assets to a spouse or civil partner before selling, since they have their own £3,000 AEA and the transfer itself is not a taxable event. Gains on investments held inside an ISA or pension are sheltered entirely. Offset capital losses against gains in the same tax year, and report any unused losses to HMRC within 4 years so you can carry them forward.

On reporting: if your total gains exceed the AEA, or your total disposal proceeds exceed four times the AEA, you must report through Self Assessment. Residential property disposals have a stricter rule. You must report and pay within 60 days of completion via the CGT property disposal service, not the following January. Missing that 60-day window triggers automatic penalties.

Keep a record of what you paid for every asset. HMRC calls this the "base cost", and you cannot calculate your gain without it. For shares bought at different times, the matching rules (same-day, 30-day, then the Section 104 pool) determine which cost applies. Most brokers give you an average cost that handles the pool calculation for you.