Capital Gains Tax FAQ

Top 10 CGT FAQ's

1. What exactly is Capital Gains Tax?

CGT is a tax on the profit (gain) you make when you sell, give away or otherwise dispose of an asset and its value has increased since you acquired it. It isn’t charged on the total amount of money you receive from the sale, but on the difference between what you paid (or what it was worth when you acquired it) and what you sell it for.

If you acquired something for £10,000 and sold it for £15,000, your gain is £5,000 — that is the figure on which CGT will (potentially) be calculated.

2. When might CGT apply?

CGT can apply when you sell or dispose of assets such as: shares, investment funds, second properties, land, business assets, and sometimes collectibles or digital assets (such as cryptocurrency).

It can also apply when you gift an asset, swap an asset, or transfer an asset on divorce or separation — the rules can be more complex in those cases.

3. Are there any allowances or reliefs that reduce CGT?

Yes — each individual has an annual exempt allowance (sometimes called the Annual Exempt Amount) which means you can realise a certain amount of gain in a tax year before CGT is charged.

Additionally, there are reliefs (for example, when selling business assets, or certain reliefs on your main home) that may reduce or eliminate liability depending on circumstances.

4. What are the current CGT rates for individuals?

CGT rates vary depending on the type of asset, your taxable income and whether you’re a basic rate taxpayer or higher/additional rate taxpayer. As a broad indication: some gains may be taxed at a lower rate for basic rate taxpayers, and a higher rate for higher rate taxpayers.

It’s important to check the specific rate for the tax year and Asset type as the rules change. You can see further information on this subject by taking a look at our Capital Gains Tax Rates page.

5. Is my main home always exempt from CGT?

Not always. Your “main residence” may qualify for relief (often referred to as Private Residence Relief), so that no (or only limited) CGT is due on disposal of your home in many cases. However, if you’ve used part of the home for business, or let it out, or sold land attached, or if it’s a second home rather than your main residence, things become more complex.

Always worth checking whether you qualify for the relief and whether any restrictions apply.

6. What happens if I sell a property and I’m UK resident but the property is abroad (or vice‑versa)?

If you’re UK resident, you’re usually liable to CGT on disposals of assets located anywhere in the world — not just UK‑located assets.

There are specific rules for non‑residents and for overseas assets, and the timing and tax residence status can complicate matters. If you think this may apply to you, it’s wise to seek dedicated advice.

7. When do I need to report CGT and pay what I owe?

You need to report your gain and pay CGT within the deadlines set by HM Revenue & Customs (HMRC). For example, for the disposal of UK residential property, there is a requirement to report and pay CGT within a set number of days after completion.

If you don’t comply with deadlines, you might incur penalties or interest. The timelines will vary depending on asset‑type and whether you already file Self Assessment.

8. What records should I keep for CGT purposes?

Good record‑keeping is essential. You should keep details of: when you acquired the asset, how much you paid (or market value if inherited or gifted), any costs of improvement or sale, how you disposed of it (sale/gift), and whether any reliefs apply. These records help calculate your gain accurately and support your position if HMRC queries it.

If you can’t provide proper records, HMRC may ask for market value estimates, and the tax‑bill may be higher.

9. Can I reduce or defer CGT liability legally?

Yes — in many cases there are legitimate ways to reduce or defer your CGT liability. For example: making use of your annual exemption, offsetting losses, spreading disposals over tax years, transferring assets to a spouse (if applicable) or using certain reliefs for business assets.

However, the rules are complex and HMRC scrutinises aggressive planning — professional advice ensures you remain compliant and avoid unexpected challenges.

10. What if I’ve already disposed of an asset but didn’t report it? What should I do?

If you’ve realised a gain and your tax position wasn’t reported, you should act as soon as you become aware. Late reporting may attract penalties and interest. HMRC offers disclosure options and you may be able to correct your position voluntarily, which can reduce penalties.

It’s generally better to address the issue early rather than wait for HMRC to approach you.

At The Tax Faculty, we understand that CGT can be confusing and complex, especially when it comes to property. That's why we are here to help. Our team of experts can provide you with tailored advice and guidance on all aspects of CGT, including how to minimise your liability and take advantage of any exemptions or allowances that may apply to your situation.

If you are thinking of selling a property or any other asset and want to make sure you are not paying more CGT than you need to, contact us today for a free consultation. We can help you navigate the complexities of CGT and ensure that once a property has sold that all filing is completed within the 60-day time limit.

If you require assistance with you CGT circumstances, please feel free to contact us on info@capitalgainstax.co.uk or call us free on 0800 0016 878 for a free initial consultation.

You can also complete the form below and one of our team will get back to you as soon as possible.

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