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Capital Gains Tax (CGT)

  • 2 min read

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:

Type of asset Basic rate Higher rate
Shares 10% 20%
Residential property 18% 28%
Bitcoin/cryptocurrency 10% 20%
Other 10% 20%

How much can I make before owing CGT?

You only pay CGT on your profits that are above the Capital Gains Tax allowance. In the 2021/22 tax year, this Capital Gains Tax allowance is £12,300. This means that if you make less than £12,300 profit in a tax year, it’s tax-free. Be aware though that this is £12,300 across all your profits, not per gain.

Do I add my profits and wages together?

No.

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.

Do I pay CGT when I move house?

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.

How to pay Capital Gains Tax

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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