Capital Gains Tax UK

Overview

Calculate Capital Gains Tax UK using the official rates and regulations for United Kingdom.

How it works

Enter the base amount and the calculator will apply the relevant rates and brackets to compute the result.

Understanding Capital Gains Tax in the UK

Capital Gains Tax (CGT) is charged on the profit you make when you sell or dispose of an asset that has increased in value. It is the gain that is taxed, not the total amount you receive. For the 2024-25 tax year, the annual exempt amount (Annual Exempt Amount) is £3,000 for individuals, significantly reduced from previous years. This means only gains above this threshold are subject to tax. CGT applies to a wide range of assets including shares, investment properties, business assets, and valuable personal possessions worth more than £6,000. Your main residence is generally exempt from CGT through Private Residence Relief, though this can be reduced if you have let part of the property or used it for business purposes.

CGT Rates and Bands

The rate of CGT you pay depends on your income tax band and the type of asset. For the 2024-25 tax year, basic rate taxpayers pay 10% on gains from most assets and 18% on gains from residential property. Higher rate and additional rate taxpayers pay 20% on most assets and 24% on residential property gains. These rates apply to the portion of the gain that falls above the annual exempt amount after adding the gain to your taxable income to determine your band. The gain is effectively treated as the top slice of your income, so it may span multiple tax bands.

Calculating Your Gain

To calculate your capital gain, subtract the original purchase price (allowable cost) from the sale proceeds. Allowable costs include the purchase price, stamp duty, legal fees, improvement costs (but not routine maintenance), and selling costs. For shares, you can use the share pooling rules or the bed-and-breakfast rules to calculate the base cost. If you received the asset as a gift, the market value at the time of the gift is usually used as the disposal value for the donor. Losses from other disposals in the same or previous tax year can be offset against gains to reduce your CGT liability.

Reporting and Payment

Since April 2020, UK residents must report and pay CGT on UK residential property within 60 days of completion using the HMRC property reporting service. For other assets, CGT is reported through the Self Assessment tax return by 31 January following the end of the tax year. If you are not registered for Self Assessment, you can report gains using the real-time Capital Gains Tax service on the HMRC website. Late reporting and payment can result in penalties and interest charges, so it is important to keep good records of all asset purchases, improvements, and disposals throughout the year.

Reliefs and Exemptions

Several reliefs can reduce your CGT bill. Business Asset Disposal Relief (formerly Entrepreneurs' Relief) reduces the rate to 10% on qualifying business disposals up to a lifetime limit of £1 million. Investors' Relief provides a similar 10% rate for qualifying share disposals with a lifetime limit of £10 million. Holdover Relief allows you to defer the gain on gifts of business assets. Rollover Relief allows you to defer the gain when reinvesting proceeds in new business assets. Incorporation Relief applies when you transfer a business to a company in exchange for shares. Each relief has specific conditions and time limits that must be met to qualify.

Strategies for Minimising Capital Gains Tax Liabilities

Several legitimate strategies exist to reduce CGT exposure in the UK. Bed and ISA transactions involve selling assets in a general investment account and immediately repurchasing them within an ISA wrapper, effectively shielding future gains from tax entirely. The annual exemption should be used strategically by realising gains up to the threshold each tax year rather than accumulating unrealised gains that could exceed the exemption in a single year. Spousal transfers are free of CGT, allowing couples to double their annual exemptions by transferring assets to a lower-earning spouse before disposal. Charitable donations of appreciated assets eliminate CGT entirely while providing income tax relief on the market value of the gift. Loss harvesting, where losing investments are sold to crystallise losses that offset gains in the same tax year, is another effective approach that requires careful record-keeping and reporting on your Self Assessment return.

Reporting Requirements and Key Deadlines

Capital gains must be reported to HMRC through the Self Assessment system by 31 January following the end of the tax year in which the disposal occurred. For the 2025-26 tax year, gains above the annual exemption must be declared even if no tax is due. The calculation requires records of acquisition costs, disposal proceeds, incidental costs of buying and selling, and any enhancement expenditure. Investors holding shares where multiple purchases occurred at different prices can use the section 104 holding method to calculate average cost, or identify specific shares for more favourable treatment. Maintaining detailed records for at least 22 months after the Self Assessment filing deadline is legally required, though retaining them for longer is prudent given HMRC's enquiry window extends to four years for careless errors.