Capital gains tax

By understanding and planning for Capital Gains Tax, you can minimise your tax liability and make the most of the available reliefs and exemptions. We’re here to guide you if you need help with a specific disposal or understanding your obligations.

Rules, exemptions, and planning opportunities

Capital gains tax (CGT) is payable on the profit you make when selling or disposing of certain assets, such as property, shares, or business assets, that have increased in value. The tax applies to the gain, not the total amount received. With the annual CGT exemption significantly reduced for the 2024/25 and 2025/26 tax years, careful planning is more important than ever.

Key allowances for 2025/26

• The annual CGT exemption is £3,000. Gains above this threshold are subject to tax.
• Married couples and civil partners can each claim the £3,000 exemption, allowing a combined total of £6,000.
• Gains on most assets are taxed at 18% (basic-rate taxpayers) or 24% (higher- and additional-rate taxpayers).
• Trustees typically pay 24% on gains from both residential property and other chargeable assets.

Key considerations

• Use your annual exemption: Ensure you make the most of the £3,000 exemption before 5 April 2025, as unused allowances cannot be carried forward.
• Spousal and partner planning: Transferring assets to a spouse or civil partner before disposal can allow both exemptions to be used, reducing CGT liability.
• Offsetting losses: If you have assets that have fallen in value, consider selling them to realise a loss, which can be offset against your gains in the same tax year or carried forward.
• Deferring or rolling over gains: Certain investments, such as those qualifying for the Enterprise Investment Scheme (EIS) or Seed Enterprise Investment Scheme (SEIS), may allow gains to be deferred or rolled over into new investments.
• Business reliefs: If you’re selling a business, investigate whether you qualify for business asset disposal relief (formerly entrepreneurs’ relief), which reduces CGT on qualifying gains to 10%. However, this rate is set to increase to 14% for disposals made on or after 6 April 2025, and further to 18% for disposals on or after 6 April 2026.
• Main residence exemption: If you sell your main home, you may qualify for private residence relief, which exempts most or all of the gain from CGT. Consider making a main residence election for second homes or rental properties to optimise relief.

Important deadlines

If you sell a residential property that is not your main residence, you must report the gain and pay any CGT owed within 60 days of the sale completion. For other assets, CGT is usually paid via self-assessment by 31 January following the tax year of the disposal.