Capital Gains Tax for the UK

If you’ve ever sold a property, investment, or business in the UK and made a profit, you may be liable for Capital Gains Tax (CGT).

As the UK government continues to freeze allowances and tighten tax policy, CGT has become an increasingly important issue for both residents and expatriates. Whether you’re selling a second home, cashing in shares, or restructuring your investment portfolio abroad, understanding how Capital Gains Tax works is essential to protecting your wealth and planning efficiently.

At Blacktower Financial Management, we help clients across the UK, Europe, and beyond to manage and minimise tax exposure through expert cross-border advice. Here’s everything you need to know about UK Capital Gains Tax in 2025 — who pays it, what’s changing, and how to plan smartly.

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1️⃣ What Is Capital Gains Tax?

Capital Gains Tax (CGT) is a tax on the profit (“gain”) made when you sell, transfer, or dispose of an asset that has increased in value.

You’re only taxed on the gain, not the total sale price.

Example:

If you bought an investment property for £200,000 and sold it for £300,000, your capital gain is £100,000 — and that’s the amount potentially subject to CGT.

CGT applies to both individuals and trusts, covering a range of assets, including:

• Property (excluding your main home)
• Shares and investments
• Business assets
• Personal possessions worth over £6,000 (e.g., artwork or jewellery)

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2️⃣ Current Capital Gains Tax Rates (2025)

The UK’s CGT rates for the 2024–2025 tax year remain as follows:

Asset Type	Basic Rate Taxpayer	Higher/Additional Rate Taxpayer
Residential property	18%	24%
Other assets (e.g., shares, funds, business assets)	10%	20%

Note: In 2023, the government reduced the higher rate for residential property from 28% to 24% to encourage sales and investment mobility.

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

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3️⃣ The Annual CGT Exemption — Reduced Again

Every individual receives a CGT Annual Exempt Amount (AEA), allowing you to make a certain amount of gains tax-free each year.

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

This sharp reduction — by 75% over two years — means more individuals are now liable for CGT, especially those selling investment portfolios or property.

Couples can combine allowances, giving a joint exemption of £6,000 in 2025 if both hold the asset.

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4️⃣ When Do You Pay Capital Gains Tax?

You must report and pay CGT when you:

• Sell a second home or investment property.
• Dispose of shares or units in investment funds (unless held in an ISA or pension).
• Sell or transfer valuable personal items.
• Gift assets to anyone other than your spouse or civil partner.
• Sell or give away business assets.

Exemptions

You do not pay CGT on:

• Your main residence (under Private Residence Relief).
• Assets held within ISAs or pensions.
• Gifts to a spouse or charity.

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5️⃣ Capital Gains on Property

Property remains one of the most common sources of CGT liability in the UK — particularly for expatriates who still own UK homes.

Primary Residence Exemption

If the property sold is your main home, you will likely qualify for Private Residence Relief (PRR), exempting it from CGT.

However, PRR does not apply to:

• Second homes or holiday lets.
• Buy-to-let properties.
• Overseas residents who do not meet the “residency test” for UK property relief.

Reporting Deadlines for Property Sales

Since 2020, individuals must report and pay CGT within 60 days of completing the sale of a UK residential property.

This rule applies to UK residents and non-residents alike.

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6️⃣ Capital Gains for UK Expats and Non-Residents

Even if you live abroad, you may still owe CGT to HMRC on UK assets.

Non-Residents

• Non-UK residents are subject to CGT only on UK property (residential or commercial).
• Other gains (e.g., on shares or non-UK property) are not taxable in the UK.
• You must still report property sales via HMRC’s online CGT service — even if no tax is due.

Temporary Non-Residence Rule

If you leave the UK and sell assets while abroad, you may still be liable for CGT if you return within five years.

This rule prevents individuals from using short-term emigration to avoid tax on disposals.

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7️⃣ How Capital Gains Are Calculated

Your capital gain is calculated as:

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

Allowable Costs May Include:

• Purchase and sale costs (solicitor, estate agent fees, stamp duty).
• Improvement costs (extensions, refurbishments — not maintenance).
• Certain transaction expenses.

You can also offset capital losses against gains, either in the same year or carried forward indefinitely.

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8️⃣ CGT and Investment Portfolios

CGT applies not just to property, but also to investments such as:

• Shares and equities
• Unit trusts and mutual funds
• Exchange-traded funds (ETFs)

Profits from the sale of investments held outside tax shelters (such as ISAs or pensions) are taxable.

To minimise your exposure:

• Use tax-efficient wrappers such as ISAs, offshore bonds, or Assurance Vie policies.
• Time disposals strategically across tax years to use annual exemptions.
• Rebalance portfolios with professional guidance to avoid triggering unnecessary gains.

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9️⃣ Planning Strategies to Reduce CGT

CGT can be reduced or managed through careful financial planning.

✅ 1. Use Annual Exemptions

Each year, you can realise gains up to your allowance (£3,000 per person) tax-free. Couples can double this.

✅ 2. Offset Losses

Record and claim capital losses promptly — they can reduce future gains and overall liability.

✅ 3. Time Disposals Wisely

If possible, spread disposals across tax years to make use of multiple allowances or remain within a lower income band.

✅ 4. Transfer Assets Between Spouses

Gifting assets to a spouse before sale can double available allowances and make use of lower-rate tax bands.

✅ 5. Consider Investment Structures

For expatriates or high-net-worth individuals, Assurance Vie (in France or Portugal) or offshore investment bonds can allow capital growth free of annual UK CGT until funds are withdrawn.

✅ 6. Seek Professional Advice Before Selling

A financial adviser can help you structure sales, transfers, and reinvestments tax-efficiently — particularly if you live abroad or hold multiple assets across jurisdictions.

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🔟 The Future of CGT in 2025 and Beyond

CGT remains a politically sensitive area. With the annual exemption now at its lowest level in decades, more individuals — particularly investors and landlords — are being drawn into the system.

Future governments may:

• Further align CGT rates with income tax, potentially increasing liabilities.
• Review property and business reliefs.
• Tighten rules for non-residents and offshore holdings.

This makes ongoing review and proactive financial planning essential.

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How Blacktower Can Help

At Blacktower Financial Management, we help UK residents and expatriates manage their wealth efficiently — ensuring you’re compliant with UK tax rules while maximising the value of your assets.

Our advisers can help you:

• Assess your CGT exposure on property and investments.
• Build tax-efficient investment strategies tailored to your goals.
• Manage cross-border tax obligations if you live abroad.
• Integrate CGT planning into your broader retirement and estate strategy.

📞 Book your complimentary consultation today
Speak to a Blacktower adviser and discover how professional wealth management can help you reduce your UK Capital Gains Tax burden — and keep more of what you’ve worked hard to earn.

This communication is for informational purposes only based on our understanding of current legislation and practices which is subject to change and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice form a professional adviser before embarking on any financial planning activity.

Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.