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Capital Gains Tax (CGT) is the tax you pay when you sell an asset (a property, shares, Bitcoin, personal possessions etc.) for a profit. Any profit you make is known as a capital gain. Here’s the rate that you’re charged for various investments:
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You only pay CGT on your profits that are above the Capital Gains Tax allowance. In the 2023/24 tax year, this Capital Gains Tax allowance is £6,000. This is down from £12,300 in the 2022/23 tax year.
Now, if you make less than £6,000 profit in a tax year, it’s tax-free – but be aware that this is £6,000 across all your profits, not per gain.
Capital Gains Tax is calculated separately from your general earnings. This is because it’s taxed completely differently. If you earn income from self-employment, rental income from hosting on Airbnb, and profits from selling a family heirloom, for instance, you pay Income Tax on your self-employment and rental income, and CGT on your heirloom profits.
Don’t add them together. Income Tax, National Insurance and CGT each have their own tax rates and allowances.
No. You don’t pay CGT when you move house. You only pay it as a landlord when you sell a buy-to-let property. Also, if you pass your property on to your spouse or children after you die, they won’t need to pay CGT if they live in the property.
If you’re an individual taxpayer and you have made a capital gain above the CGT allowance, you’ll need to file a Self Assessment tax return to declare this profit and pay tax on it. If you’re not sure how much you owe, check out our Capital Gains Tax calculator.
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