What counts as a taxable gain
Capital Gains Tax (CGT) applies when you sell or dispose of an asset for more than you paid for it — common examples include shares held outside an ISA, a second property or buy-to-let, and valuable personal possessions above a certain value. Your main home is usually exempt via Private Residence Relief, and gains inside ISAs and pensions are also exempt.
The annual exempt amount
Each tax year, you can make gains up to the annual exempt amount — currently £3,000 — completely tax-free. Only gains above this amount are taxable, and the allowance can't be carried forward if unused.
Current rates
| Taxpayer band | CGT rate (most assets) |
|---|---|
| Basic rate | 18% |
| Higher / additional rate | 24% |
Which rate applies depends on your total taxable income plus gains for the year — gains are effectively "stacked" on top of your income to determine which band they fall into.
How gains are calculated
Broadly: sale proceeds, minus what you originally paid, minus allowable costs (such as purchase and sale fees, or improvement costs for property), equals your gain. Losses on other assets sold in the same or previous years can often be offset against gains, reducing the taxable amount.
Reporting and paying
Most CGT is reported and paid via Self-Assessment, though gains on UK residential property (other than your main home) must be reported and paid within 60 days of completion, separately and much faster than the normal Self-Assessment timetable.
Key takeaways
- CGT applies to gains on assets like shares, second properties and valuable possessions, above the £3,000 annual exempt amount.
- Rates are 18% (basic rate) or 24% (higher/additional rate), depending on total income and gains.
- Losses can often be offset against gains to reduce the taxable amount.
- Property gains must be reported and paid within 60 days — much faster than ordinary Self-Assessment.