What are capital gains? What is Capital Gains Tax (CGT)? What are the Capital Gains Tax rates, bands, reliefs and exemptions?

This is a freeview 'At a glance' guide to Capital Gains Tax, rates & allowances.

What is a capital gain?

A capital gain is created by selling an asset for more than you paid for it.

• An asset for capital gains purposes is any item that has enduring value, typically land and property, shares and other investments. 
• A gain can also arise if you dispose of an asset in other ways, for example, if you gift an asset to a connected person, the market value can in certain situations be deemed to be your sales proceeds, or alternatively, if your asset is destroyed and you receive an insurance payout.
• A loss applies when the reverse of the above occurs: where you receive less for the disposal of the asset than you paid for it.
• See CGT: Reporting when & how?

Capital Gains Tax (CGT)

• CGT is calculated and paid on any capital gains that you make.
  If you have a capital loss you can usually offset this against your gains of the year or carry it forward; in some circumstances the offset of capital losses is restricted. See CGT: Connected persons & losses
• See How to calculate CGT

Capital Gains Tax (CGT) rates and bands

	From 6 April 2023	From 6 April 2020	2019-20	2018-19	2017-18	2016-17	2015-16	2014-15	2013-14
Standard rate (basic rate taxpayers)	10% / 18% *	10% / 18% *	10% / 18% *	10% / 18% *	10% / 18% *	10% / 18% *	18%	18%	18%
Higher rate (higher and additional rate taxpayers)	20% / 28% *	20% / 28% *	20% / 28% *	20% / 28% *	20% / 28% *	20% / 28% *	28%	28%	28%
Business Asset Disposal Relief (Entrepreneurs' Relief) effective rate	10%	10%	10%	10%	10%	10%	10%	10%	10%
Annual exemption
Individual	£6,000 **	£12,300	£12,000	£11,700	£11,300	£11,100	£11,100	£11,000	£10,900
Settlement(s) - trustees	£3,000 **	£6,150	£6,000	£5,850	£5,650	£5,550	£5,550	£5,500	£5,450
Chattels exemption (proceeds per item or set)	£6,000
Marginal relief	5/3 excess over £6,000
Business Asset Disposal Relief (Entrepreneurs' Relief) lifetime allowance	£1 million		£10 million (until 11 March 2020, then £1million)

 

Which rate?

* The CGT rates of 10% and 20% introduced for disposals on or after 6 April 2016 do not apply to transactions involving Residential property or carried interest. CGT rates for these transactions remain at 18% and 28%.

** Annual exemption 

• Finance Act 2023 provides that from April 2023:
  • The Annual Exempt Amount is reduced from £12,300 to £6,000.
  • This will reduce the amount for trusts to £3,000.
  • The proceeds reporting limit for CGT is fixed at £50,000.

• Finance Act 2023 also provides that from April 2024:
  • There will be a further permanent reduction for individuals and personal representatives to £3,000.
  • The amount for trusts will correspondingly be permanently reduced to £1,500.

Special cases

• Bitcoin and other cryptocurrencies and crypto-asset gains are subject to CGT, if held as investments by individuals. See How are bitcoin, cryptocurrency or cryptocurrency assets taxed? 
• Regular trading in cryptocurrency may be regarded as a trading activity and not as gambling, if the badges of trade are met, see Badges of trade: Are you trading or not.
• Since April 2015, non-UK residents have to pay CGT on gains realised on UK residential property. The gain taxable is restricted to any growth from the April 2015 value. Alternatively, the seller can elect to pay on a time apportionment basis if doing so would be beneficial. For example: where Private Residence Relief (PRR) would be available. See Non-resident CGT: UK property. Don't forget the 60-day reporting requirement which was extended from 30 days from 27 October 2021.
  
• Since April 2019, non-UK residents have paid CGT on gains realised on UK land and property (both commercial and residential).
• Executors/estates pay CGT at the higher rates of 20% and 28%.

Capital Gains Tax basic rules

• A transfer between spouses or civil partners is generally tax-free, made on a no gain/no loss basis.
• A gift made between Connected persons is treated as being made at market value.
• The Date of disposal needs to be determined to ensure the gain is declared in the correct tax year, particularly where proceeds are deferred or the disposal is conditional.
• An interim distribution made during the Liquidation or striking off process is taxed on the date the distribution is made and not the date that the company is finally wound up/struck off. It is part of a disposal of the shares. 
• When a disposal attracts another form of tax, such as Inheritance Tax or Income Tax, credit is generally given so there is no double charge.
• The indexation allowance no longer applies to individuals and was frozen for companies on 31 December 2017.
• An Income Tax Trading loss may be offset against capital gains.
• Capital gains may be deferred by reinvestment. See Which investment relief: IR, BADR, SEIS or EIS?.
• Non-UK residents are not taxed on gains made on UK situs assets other than UK land and property, provided that they remain non-resident for a qualifying time period.

• Finance Act 2019 introduced a requirement for UK residents to declare their gain and make a payment on account of Capital Gains Tax following the completion of a UK residential property disposal. From 27 October 2021, an Online property disposal return must be filed and the tax paid within 60 days of completion of the disposal transaction unless no tax is due. Before 27 October 2021, there was a 30-day reporting and payment period.

Capital Gains Tax reliefs: Disposal of business assets.

Old Rates

	2011-12 to 2012-13	2010-11	2009-10	2008-09
Standard rate (basic rate taxpayers)	18%	18%	18%	18%
Higher rate taxpayers rate	28%	28%	18%	18%
Business Asset Disposal relief (Entrepreneurs' Relief) effective rate	10%	10%	10%	10%
Annual exemption
Individual	£10,600	£10,100	£10,100	£9,600
Settlement(s) - trustees	£5,300	£5,050	£5,050	£4,800
Chattels exemption (proceeds per item or set)	£6,000
Marginal relief	5/3 excess over £6,000
Business Asset Disposal Relief (Entrepreneurs' Relief) lifetime allowance	£10 million	£5 million/ £2 million until 22 June 2010	£1 million	£1 million

 

• Next