Capital gains tax: more people have to pay, so here's what you need to know

Less generous rules have turned capital gains tax into a “cash machine”, with revenue climbing almost 80% to £24.3bn in the last tax year — equivalent to well over £800 a household. More people are being pulled into the CGT net, not only the wealthy, and the Office for Budget Responsibility expects receipts to rise further.

CGT is charged on the profit you make when you sell, or “dispose of”, something that has increased in value. The annual tax-free allowance has been cut sharply — from £12,300 until 2022-23, to £6,000 and now £3,000 — and any unused allowance is lost at the year end.

Rates were increased in the October 2024 budget: higher-rate taxpayers now pay 24% on gains, while basic-rate taxpayers pay 18% or 24% depending on their income and the size of the gain. There are several legitimate ways to reduce a bill. Transfers between spouses or civil partners are usually exempt, allowing couples to use both allowances.

United Kingdom

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