According to The Office of Budget Responsibility, Capital Gains Tax (CGT) is estimated to raise £15.2 billion in 2024-25. This represents 1.3 per cent of all UK Government receipts, equivalent to £530 per household and 0.5 per cent of national income. Here we look at the some of the key aspects of CGT and the current rates applied to both basic and high rate taxpayers.
CGT is due on profits on a disposal of a relevant capital asset. Examples of such assets include land, property, shares and goodwill. For the most part, disposing of an asset means selling it, however it can also mean giving the asset away.
Generally, the gain will be the proceeds less the cost (with a deduction available for the costs of selling and purchasing), although enhancement expenditure could also be relevant to some assets. This gain can then be offset by the annual exempt amount which is currently £3,000, down from £6,000 last year.
There are various reliefs available to individuals, including Business Asset Disposal Relief (BADR), Gift holdover relief and roll-over relief.
BADR is available to business owners who sell their business, and also on the sale of a Furnished Holiday Lettings (FHL) property business (up until 5 April 2025), subject to certain restrictions. BADR allows the taxpayer to pay CGT at a reduced rate up to maximum lifetime gains of £1m.
Capital gains are usually reported on your Self-Assessment tax return due by 31 January each year, but gains from selling residential property must be reported to HMRC within 60 days of completion if there is tax to pay, otherwise a late filing penalty will be charged.
If you require assistance with your personal or business tax planning, including CGT liability, please get in touch at tax@thomsoncooper.com.
