Capital gains tax for the UK

When you sell or dispose of an asset that has increased in value, you may be liable for Capital Gains Tax (CGT) — a levy on the profit you’ve made.

For UK residents and expatriates who still hold property, shares, or other UK-based investments, understanding how CGT works is essential. The rules have tightened significantly in recent years, and with tax allowances at record lows, more individuals are now affected than ever before.

At Blacktower Financial Management, we help clients manage their investments and assets in a way that minimises unnecessary tax exposure — ensuring they keep more of what they’ve earned. Here’s what you need to know about Capital Gains Tax in 2025.

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1️⃣ What Is Capital Gains Tax?

Capital Gains Tax (CGT) is a tax on the gain you make when selling, transferring, or disposing of an asset that has appreciated in value.

You are taxed only on the profit, not the total amount received from the sale.

Example:
If you bought a property for £250,000 and later sold it for £400,000, your gain is £150,000 — and CGT applies to that £150,000, not the full sale price.

CGT typically applies to:

• Property (excluding your main residence)
• Shares, funds, or other investments
• Business assets
• Personal possessions worth more than £6,000 (e.g. antiques, art, jewellery)

Certain assets — such as your main home, ISAs, and pensions — are exempt.

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2️⃣ Current Capital Gains Tax Rates in 2025

The 2024–2025 CGT rates remain as follows:

Asset Type	Basic Rate Taxpayer	Higher/Additional Rate Taxpayer
Residential Property	18%	24%
Other Chargeable Assets	10%	20%

Your rate depends on your total taxable income for the year. The gain is added to your income to determine which CGT band applies.

Note: The higher rate for residential property was reduced from 28% to 24% in 2023, but the annual tax-free allowance has fallen sharply — meaning more people now pay CGT.

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3️⃣ The Annual CGT Exempt Amount

Each individual has a tax-free CGT allowance, known as the Annual Exempt Amount (AEA).

Tax Year	Annual Exempt Amount
2022–2023	£12,300
2023–2024	£6,000
2024–2025	£3,000

This allowance has been cut by 75% in two years, pulling many ordinary investors and landlords into the CGT system. Couples can combine allowances, allowing up to £6,000 of gains to be realised tax-free.

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4️⃣ When Capital Gains Tax Applies

You’ll usually need to pay CGT if you:

• Sell a second property or buy-to-let.
• Dispose of shares or investment funds outside an ISA or pension.
• Gift assets to someone other than a spouse or charity.
• Sell valuable collectibles or personal possessions.
• Sell or transfer business assets.

You Don’t Pay CGT On:

• Your main residence (under Private Residence Relief).
• Assets held within a pension or ISA.
• Gifts to your spouse, civil partner, or registered charity.

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5️⃣ Property and CGT

Property is one of the most common triggers for Capital Gains Tax.

If you sell a property that is not your main home, you may be liable for CGT on the profit.

Private Residence Relief usually exempts your primary home, provided:

• You’ve lived there for the entire ownership period.
• It hasn’t been let out (other than under permitted “letting relief”).
• It hasn’t been used for business purposes.

If you sell a rental property or second home, you must report and pay any CGT within 60 days of completion. This rule applies to both UK residents and non-residents who sell UK property.

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6️⃣ CGT for Non-Residents

If you live overseas but own property in the UK, you may still owe CGT when selling it.

Since April 2015, non-UK residents have been required to pay CGT on UK residential property gains, and since 2019 this has extended to commercial property and land.

Even if no tax is due, you must report the sale to HMRC within 60 days.

⚠️ Temporary Non-Residence Rule:
If you sell UK assets while living abroad but return to the UK within five years, HMRC may still tax those gains as if you were UK-resident.

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7️⃣ Calculating Capital Gains

Your taxable gain is calculated as:

Sale Price – (Purchase Price + Allowable Costs) = Taxable Gain

Allowable costs can include:

• Purchase and sale costs (e.g. solicitor and estate agent fees).
• Home improvements or capital enhancements (e.g. extensions or renovations).
• Certain professional fees related to the sale.

You can also offset capital losses against gains to reduce your tax bill. Unused losses can be carried forward to future tax years.

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8️⃣ Reducing Your Capital Gains Tax Bill

While CGT cannot always be avoided, careful planning can significantly reduce the amount you owe.

✅ Use Annual Allowances

Each tax year, realise gains up to the £3,000 allowance (or £6,000 for couples) before selling larger assets.

✅ Transfer Assets Between Spouses

Assets transferred between spouses before sale can help double exemptions and reduce overall tax.

✅ Offset Losses

Declare investment losses promptly — they can offset future gains indefinitely.

✅ Use Tax-Efficient Structures

Investing through ISAs, pensions, or offshore investment bonds can defer or eliminate CGT entirely.

✅ Time Asset Sales Strategically

Spreading disposals across multiple tax years helps manage total taxable income and remain in a lower tax band.

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9️⃣ Looking Ahead: The Future of CGT

With rising fiscal pressure and frozen thresholds elsewhere in the tax system, Capital Gains Tax is under renewed government scrutiny.

Analysts expect future policy reviews could bring:

• Further alignment of CGT rates with income tax bands.
• Reduced reliefs for property or business assets.
• Increased focus on tax transparency and cross-border compliance.

For expatriates and high-net-worth individuals, ongoing portfolio review and professional advice are essential to ensure your tax strategy remains efficient and compliant.

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10️⃣ How Blacktower Can Help

At Blacktower Financial Management, we provide expert, regulated financial advice across the UK and internationally — helping you:

• Structure assets to minimise CGT exposure.
• Manage multi-currency investments tax-efficiently.
• Integrate CGT planning into your retirement and estate strategy.
• Coordinate with legal and tax professionals to ensure full compliance.

Whether you’re selling property, restructuring investments, or planning for the future, our advisers can help you protect and grow your wealth with confidence.

📞 Book your complimentary consultation today
Speak to a Blacktower adviser about how effective planning can help you reduce your UK Capital Gains Tax exposure.