Capital Gains Tax: The Complete Guide

Capital Gains Tax rarely catches people out because the maths is hard — it's usually the timing and the definitions that trip people up. A residential property gain can need reporting within 60 days of completion, long before your usual Self Assessment deadline, and what actually counts as your "gain" is often smaller than people fear once genuine costs are deducted. This guide covers the full picture: what triggers CGT, the main home exemption, current rates, how to work out a gain properly, the reliefs worth knowing about, and exactly when to report and pay. Use our Capital Gains Tax calculator for a quick estimate, or jump straight to Capital Gains Tax support or register your enquiry whenever you're ready.

What Actually Triggers Capital Gains Tax

Capital Gains Tax applies when you dispose of an asset for more than you paid for it — "dispose" is broader than just "sell", and it's worth knowing what counts.

A common misconception is that CGT only applies when money changes hands. Gifting an asset, other than to a spouse or civil partner, is generally still treated as a disposal at market value for CGT purposes, even though nothing was actually sold.

Selling Your Main Home

Most people never pay CGT on their own home because of Private Residence Relief, which generally exempts the gain on your only or main residence for the period you lived in it as such.

• The exemption can be reduced if you didn't live in the property as your main home for the whole period of ownership — for example, if it was let out for a stretch, or you had more than one home at once.
• Using part of your home exclusively for business can affect the relief on that portion, though normal working from home in a shared room generally doesn't.
• A large garden or grounds beyond a certain size can also affect how much of a gain qualifies for the exemption.
• If you've ever nominated a different property as your "main residence" for tax purposes while owning more than one home, this can affect which property's gain is exempt.

If your situation is a straightforward single home lived in the whole time you owned it, this exemption almost certainly covers the full gain. Anything more complicated — a period of letting, working from home, or owning more than one property — is worth checking properly rather than assuming.

Current Rates and the Annual Exempt Amount

Everyone gets a tax-free annual exempt amount before any CGT is due, and the rate on anything above that depends on your income and what you're selling.

The annual exempt amount is far smaller than it used to be — it was £12,300 as recently as 2022/23, reduced in stages since. It can't be carried forward if unused, so a gain realised just before the end of one tax year and just after the start of the next could, in principle, use two separate exempt amounts.

Working Out Your Gain

Your gain isn't the sale price — it's the sale price minus what you paid, minus certain allowable costs. Getting this calculation right can make a genuine difference to what you owe.

Keeping records of purchase costs and any capital improvements from the point you buy an asset — not scrambling to find them years later at the point of sale — makes this part of the process considerably easier, and can be the difference between a genuinely accurate gain and an overstated one.

Selling a Second Home or Rental Property

Residential property that isn't your main home — a second home, a buy-to-let, an inherited property — comes with the tightest reporting deadline in this guide.

• UK residential property gains generally need reporting to HMRC within 60 days of completion, using a separate online CGT-on-UK-property return, not your normal Self Assessment return.
• Any CGT owed is generally due within that same 60-day window, well ahead of the usual 31 January Self Assessment deadline.
• The gain still needs including on your Self Assessment return for the year as well, though the tax already paid through the 60-day return is then accounted for.
• Missing the 60-day deadline can trigger penalties and interest, separate from any Self Assessment penalties.
• This deadline applies whether or not you'd normally need to file a Self Assessment return at all.

The 60-day window is short enough that getting advice before completion — while there's still time to gather figures and consider reliefs — tends to go far more smoothly than trying to pull everything together after the sale has already gone through.

Shares and Other Assets

Disposing of shares, funds or other chargeable assets follows the same underlying principles as property, but with a more familiar reporting route.

• Gains within an ISA or pension aren't subject to CGT at all, which is one reason these wrappers are used for share investments.
• Outside a wrapper, share disposals are generally reported through your normal Self Assessment return for the year, not a separate short-deadline return like property.
• "Bed and ISA" or similar strategies, which involve selling and rebuying an asset to use up an annual exempt amount, have specific rules worth checking before assuming they work as expected.
• Selling shares in a company you've worked for or built up yourself can bring in other reliefs and considerations, worth raising specifically with a professional.

Reliefs Worth Knowing About

Beyond the annual exempt amount and Private Residence Relief, a handful of other reliefs come up regularly and are easy to miss if nobody mentions them.

These reliefs all come with conditions that are easy to miss if you're not specifically looking for them — this is exactly the kind of area where a professional's advice before a sale can be worth considerably more than the cost of asking.

Reporting and Paying What You Owe

Getting the reporting route right matters as much as getting the tax figure right — reporting a property gain through the wrong channel, or missing the 60-day window because you assumed the usual January deadline applied, are both avoidable mistakes.

Common CGT Mistakes We See

• Assuming the usual 31 January Self Assessment deadline applies to a residential property sale, and missing the much shorter 60-day window.
• Forgetting that gifting an asset to anyone other than a spouse or civil partner is still generally a disposal for CGT purposes.
• Overstating a gain by leaving out allowable costs like legal fees, agent fees or genuine capital improvements.
• Assuming shares are still taxed at the old, lower rates that applied before property and share rates were aligned.
• Not checking Private Residence Relief properly where a home was let out or used partly for business at some point.
• Leaving a sale until it's already completed before asking about reliefs that needed acting on beforehand.

Getting Help With a Disposal

CGT is one of the clearest cases where timing matters as much as the number itself. A professional can confirm what's actually taxable, work out the real gain after allowable costs, flag any reliefs worth using, and make sure the right return is filed in the right window.

Ideally, get advice before a sale completes rather than after — many of the options that reduce a CGT bill are far easier to act on ahead of time. Wherever you're based, tell us your postcode or town when you register an enquiry — see our full list of locations for more.

Frequently Asked Questions

A few more common CGT questions — see our full FAQ page for more, or get in touch directly if yours isn't covered here.