Do you think you might need to pay some CGT?
Have you received a letter from HMRC indicating that they think you might have CGT to pay?
CGT is a complex area, and we would always recommend getting advice if you need it. However, this blog includes some high-level CGT basics to point you in the right direction!
When would I pay CGT instead of Income Tax?
Generally speaking, a transaction becomes chargeable to CGT when it involves the disposal of an asset. For example; shares in a company, a house that isn’t your home or collectibles. You wouldn’t regularly be disposing of these kinds of assets and so it is common for this type of disposal to be a one-off transaction.
You are only charged to tax on your gain and, if you make a loss and tell HMRC, you are able to carry that loss forward indefinitely to offset against future gains.
This is in contrast to when you might be considered to be trading in those assets. For example, an individual who is regularly buying and flipping houses would be considered to be trading in property and subject to income tax instead. To work out if this might be you, consider the badges of trade.
Most disposals will either be chargeable to Capital Gains Tax or Income Tax unless they are exempt (see below).
Tangible, moveable property
Sometimes referred to as “chattels”, this term refers to something you own that you can touch and move like antiques, furniture and motor vehicles (although it is important to note that your private vehicle will be exempt from CGT).
Below is a table demonstrating how you calculate your capital gain on chattels:
| Did you receive less than £6,000 in sales proceeds when you sold the chattel? If so, this disposal is exempt from CGT and there is no need to report it on your tax return. | Were your proceeds more than £6,000 but less than £15,000? If so, then you need to apply a specific set of steps to work out the gain that is chargeable: 1. How much did your sale proceeds exceed £6,000 by? 2. Multiply that figure by 5/3 3. The result is the maximum chargeable gain 4. Compare with the actual net gain (i.e. proceeds less cost) 5. The lower of step 3 and 4 is your chargeable gain | Did you receive less than £6,000 in sale proceeds AND make a loss? If you make a loss on a chattel and the proceeds are less than £6,000, your loss is restricted by treating the disposal proceeds as if they were £6,000 (regardless of what you actually received). If your proceeds were more than £6,000, no such restriction applies. |
Any other asset
The rules above only apply to tangible, moveable property.
If your asset is fixed (like a house) or intangible (like shares or cryptocurrencies) then the gain is calculated differently. Broadly, the gain will be your sale proceeds less any associated costs including original cost, enhancement expenditure and costs to sale.
In the case of share disposals, it is important to note that specific ‘matching’ rules apply to calculate the gain or loss on disposal. Unless you are familiar with these rules then it is advisable to obtain the support of a tax adviser.
In some cases, sale proceeds are assumed to be market value rather than cash received, so it is important to understand when those rules come into consideration. Most commonly this is when a sale is made at undervalue or not “at arms length”.
What is exempt
Common example of exempt assets are:
- Private vehicles
- Chattels you sold for less than £6,000
- Wasting assets that have a predictable life of 50 years or less (unless you could have claimed capital allowances on it)
- Your home (if it has always been your home – consider principal private residence relief)
- Cash
- Gifts to UK registered charities
- Stocks and shares held in an ISA
Rates and allowances
In recent years, the annual exempt amount has dropped considerably. If you think you might have multiple years of CGT to calculate, consider the difference in the historic allowances when calculating your gains:
| Tax Year | Annual Exempt Amount |
| 2025/26 | £3,000 |
| 2024/25 | £3,000 |
| 2023/24 | £6,000 |
| 2022/23 | £12,300 |
The rates of CGT that you pay depends on the type of asset and your level of other income in the tax year of disposal with special rules applying to gains on property:
| Type of gain | 2022/23 | 2023/24 | 2024/25 (disposals made up to 29 October 2024) | 2024/25 (disposals made after 29 October 2024) | 2025/26 |
| Residential property gains within the basic rate tax band | 18% | 18% | 18% | 18% | 18% |
| Residential property gains above the basic rate tax band | 28% | 28% | 24% | 24% | 24% |
| Other gains within the basic rate tax band | 10% | 10% | 10% | 18% | 18% |
| Other gains above the basic rate tax band | 20% | 20% | 20% | 24% | 24% |
For the most up to date tax rates and allowances, see our 2025/26 Tax Card here.
If you have received a letter from HMRC indicating that you may have a capital gains tax liability to pay, and would like a free confidential discussion, please contact Menzies’ Tax Disputes and Disclosures team.
Contact Our Experts
