When Do You Pay Capital Gains Tax in the UK?
- Adil Akhtar
- 4 days ago
- 21 min read
Updated: 4 days ago
When You Actually Pay Capital Gains Tax in the UK – Understanding the Timing, Triggers, and 2025/26 Rules
The Short Answer – When Do You Pay Capital Gains Tax?
In the UK, you pay Capital Gains Tax (CGT) when you sell or dispose of an asset that’s increased in value — and only if your total taxable gains exceed your annual exemption (£3,000 for 2025/26). What’s key here is timing: you don’t pay CGT when you make the gain, but when the “disposal” occurs — whether that’s a sale, a gift, a swap, or compensation received.
For most assets, CGT is declared through your Self Assessment tax return for the year in which the disposal took place, meaning payment is due by 31 January following the end of the tax year (e.g., disposal in June 2025 → tax due by 31 January 2027). However, for UK residential property sales, the rules are tighter — you must report and pay any CGT within 60 days of completion using HMRC’s online property account.
Why Most People Misunderstand the Payment Timing
Picture this: you’ve just sold a buy-to-let flat in Manchester for a tidy gain and assume you can “sort the tax later in the year.” But HMRC sees it differently — you’ve only got 60 days to calculate, report, and pay the CGT from the completion date.
I’ve seen too many cases where sellers get stung by late-payment penalties because they assumed CGT works like Income Tax. It doesn’t. CGT has its own clock — and it starts ticking the day the disposal legally completes.
What Counts as a “Disposal”?
Let’s clear this up — a disposal isn’t just a sale. According to HMRC, it includes:
● Selling an asset (property, shares, crypto, art, etc.)
● Gifting it to someone (other than a spouse or civil partner)
● Swapping one asset for anotherReceiving insurance compensation after loss or damage
The taxable event happens even if you don’t receive cash. For example, if you gift a valuable painting to a relative, HMRC treats it as though you sold it for market value, and CGT could apply.
2025/26 Capital Gains Tax Rates – Up-to-Date Breakdown
Here’s the confirmed position as of August 2025, reflecting changes effective from 6 April 2025:
Taxpayer Type | Asset Type | CGT Rate |
Basic Rate (total taxable income + gains ≤ £50,270) | Most assets | 10% |
Basic Rate | Residential property | 18% |
Higher/Additional Rate (income + gains > £50,270) | Most assets | 20% |
Higher/Additional Rate | Residential property | 24% (reduced from 28% in April 2024) |
Annual Exempt Amount (AEA): £3,000 per individual (£6,000 for couples jointly owning). Trusts: £1,500 exemption.
The freeze on income tax thresholds and personal allowance (£12,570) continues for 2025/26 — a quiet “stealth tax” effect that drags more people into higher CGT bands.
Step-by-Step: How to Know If You Owe CGT
When clients ask, “Do I actually need to pay anything?”, I walk them through this exact 5-step check:
1. Identify the Asset
Was it property, shares, crypto, or a business sale? Different rules apply to each.
2. Calculate the Gain
Take sale proceeds minus purchase price, then subtract allowable costs like legal fees, improvement costs, and stamp duty.
3. Deduct Any Losses
If you sold another asset at a loss in the same or earlier years (and reported it), offset this against your gains.
4. Apply Your Annual Exemption (£3,000)
If your total gains after losses are below £3,000, there’s nothing to pay or report.
5. Apply the Right Rate
If you’re a basic rate taxpayer, add your taxable income to your gains. If the total pushes you into higher rate territory, only the portion above the basic rate band is taxed at the higher CGT rate.
Real-World Example: The Freelance Designer and the Studio Flat
Let’s take Amira, a freelance designer from Bristol. She earns £42,000 from self-employment and sells a studio flat in June 2025 with a gain of £40,000 after deducting costs.
Her taxable income (£42,000) plus gains (£40,000) = £82,000.
The basic rate band ceiling is £50,270.
The portion of her gain up to £8,270 falls into basic rate band → taxed at 18% (residential).
The remaining £31,730 is taxed at 24% (residential).
She must report and pay via HMRC’s property account within 60 days of completion.
In practice, Amira sets aside £9,500 for CGT — a painful but necessary safeguard against penalties.
What If You’re Selling Shares or Crypto?
Unlike property, there’s no 60-day rule for most share or crypto sales. Instead, you declare the gain on your Self Assessment return for that tax year. So, a crypto sale in February 2026 would fall under your 2025/26 return, due 31 January 2027.
But be careful: HMRC has become increasingly active in matching crypto exchange data to taxpayer records. I’ve handled several cases where clients received “nudge letters” because they hadn’t reported digital gains — even small ones.
Tip: keep a clear record of acquisition and disposal values, exchange fees, and the dates of each transaction.
The Common Traps That Lead to Unplanned CGT Bills
Here’s what regularly trips up taxpayers in real life:
● Selling a second home or former main residence without checking the Private Residence Relief rules.
● Forgetting improvement costs (new roof, extension) that reduce your taxable gain.
● Gifting assets to adult children, unaware this counts as a disposal.
● Joint ownership mix-ups – spouses each have a £3,000 allowance, but only if ownership is legally shared.
● Failing to report residential sales within the 60-day window.
A quick checklist I give clients:
Was there any increase in value since purchase?
Did you receive or transfer ownership of the asset?
Was it your main home?
Did you incur improvement costs?
Have you used your CGT allowance this year?
If you answer “yes” to at least two of those, it’s time to run the numbers properly.
How the 2025 Updates Affect Your Tax Bill
Since April 2024, two key shifts changed how CGT impacts ordinary taxpayers:
Annual Exemption Shrinkage: Down to £3,000 from £6,000 (April 2024) — this smaller allowance means even modest profits can now trigger a tax bill.
Residential Rate Cut: The higher rate dropped from 28% to 24%, easing the burden for landlords selling up.
The Government kept the basic rate at 18% and non-residential rates unchanged. But don’t mistake the lower property rate for leniency — the smaller exemption has a bigger bite.
Case Note: The Landlord Who Missed the 60-Day Window
A client — let’s call him Trevor from Leeds — sold a buy-to-let in September 2024. His solicitor mentioned “reporting to HMRC”, but he assumed it was handled automatically. Four months later, a letter from HMRC landed: £1,200 in late-filing and interest charges.
The lesson? Solicitors don’t file your CGT return — you (or your accountant) must. Always confirm your CGT Property Account submission yourself, even if your conveyancer “deals with the numbers.”
A Quick Visual: Timing of CGT Payments
Scenario | When You Pay | How You Pay |
Sale of UK residential property | Within 60 days of completion | Online via HMRC’s CGT on UK Property Account |
Sale of other assets (shares, crypto, business) | By 31 January after the end of tax year | Through your Self Assessment return |
Trust or estate disposals | Same as above | Trustee/Executor via Self Assessment |
Why Timing Matters More Than Ever in 2025
With the annual exemption now just £3,000, even small asset sales can cross the threshold. Timing disposals smartly — for example, splitting sales across tax years or sharing ownership with a spouse — can legally halve or defer your CGT bill.
In practice, I often advise clients to stagger disposals before 5 April if multiple gains are looming. A simple timing shift can sometimes save hundreds in tax, especially for share investors or landlords winding down portfolios.
How to Calculate, Report, and Reduce Your Capital Gains Tax in 2025/26
Getting Your Calculation Right – The Heart of Paying the Right Tax
Let’s be honest — working out your Capital Gains Tax can feel like decoding a riddle wrapped in numbers. HMRC’s guidance (see Capital Gains Tax: what you pay it on, rates and allowances) gives the framework, but in practice, many taxpayers either overpay through fear or underpay through guesswork.
Here’s the good news: once you understand the basic structure, the maths isn’t that bad — and a few legitimate deductions can make a big difference.
The Golden Formula for Working Out Your Gain
You’re taxed on the profit (gain), not the sale price. Use this simple formula:
Sale proceeds – (Purchase cost + Allowable costs + Reliefs + Losses brought forward) = Taxable gain
Allowable costs include:
● Purchase and sale legal fees
● Stamp Duty Land Tax paid on acquisition
● Improvement costs (e.g., extensions, structural changes — not maintenance)
● Estate agent or broker fees
Be careful here: I’ve had clients try to deduct furniture, repainting, or replacement carpets — those don’t qualify. HMRC’s rule (see Work out your gain) is clear: only improvements that add value or extend life of the asset count.
Case Study: The London Flat Upgrade
Take Lucy, an IT contractor who bought a flat in Croydon for £250,000 in 2015. She sells it in 2025 for £410,000.
● Purchase costs: £250,000
● Legal/stamp duty/agent fees: £8,000
● Extension and kitchen upgrade: £22,000 (qualifies as improvement)
● Total costs: £280,000
● Gain: £410,000 – £280,000 = £130,000
After her £3,000 annual exemption, the taxable gain = £127,000. She’s a higher-rate taxpayer, so 24% CGT applies (residential rate).
Lucy owes £30,480 in CGT, payable within 60 days via the CGT on UK Property Account.
If she had sold after 6 April 2026, her next tax year’s allowances might differ — timing matters that much.
Reporting and Paying Capital Gains Tax Correctly
You can report and pay in two main ways, depending on what you sold:
For UK residential property sales – use HMRC’s Capital Gains Tax on UK property account within 60 days of completion.
○ You’ll need your Government Gateway ID.
○ You can also authorise your accountant to submit on your behalf.
For all other assets (shares, crypto, business, land abroad) – declare through your Self Assessment by 31 January after the end of the tax year:
Report and pay Capital Gains Tax in your Self Assessment tax return.
Miss either of those deadlines, and HMRC’s interest and penalties start adding up fast. I once had a client who left a property sale unreported until their accountant spotted it a year later — the delay cost over £800 in fines.
Record-Keeping – The Bedrock of Any Defence
HMRC is increasingly data-matching land registry, broker platforms, and crypto exchanges with taxpayer records. That’s why I always tell clients: keep everything — dates, contracts, invoices, fees, and bank transfers.
According to HMRC’s record keeping guidance, you should keep:
● Purchase and sale receipts
● Estate agent and solicitor statements
● Details of costs for any improvements
● Evidence of losses you plan to offset
● Crypto transaction logs if relevant
Keep them for at least one year after 31 January of the tax year the gain was reported (five years if you file late or self-employed).
What If You Make a Loss?
Losses can be your friend if you plan right. If your total gains in a year are below the annual exemption, you might not owe tax — but you should still report the loss within four years to “bank” it for future use.
Example:
● You made a £10,000 gain selling shares in 2025/26.
● You sold a second property at a £12,000 loss. You can report both and carry forward the £2,000 unused loss to offset against future gains.
Report losses via your personal tax account or on your Self Assessment form.
Tax Reliefs That Can Save You Thousands
Here’s where the system gets interesting — and where an experienced adviser really earns their keep.
Private Residence Relief (PRR)
If the asset was your main home, the gain for the time you lived there is usually exempt under Private Residence Relief. You also get relief for the final 9 months of ownership, even if you weren’t living there.
Be careful though — let out part of your home, or use it for business, and you could lose a slice of that relief.
Lettings Relief (niche but valuable)
You might qualify for Lettings Relief up to £40,000 (£80,000 for couples) if you let out part of your main home. But it only applies if you actually lived there at some point.
Business Asset Disposal Relief (formerly Entrepreneurs’ Relief)
For business owners selling shares or trading assets, Business Asset Disposal Relief is the big one — cutting your CGT rate to 10% on qualifying gains up to £1 million lifetime limit.
Typical qualifying cases:
● You’re a sole trader or partner disposing of your business.
● You’ve held 5%+ shares in your personal trading company for at least two years.
● You’re an employee/officer of that company.
I’ve seen directors mistakenly sell shares after resigning, unaware they no longer qualified because the company wasn’t trading. Always confirm eligibility before you sign any sale contracts.
Rollover Relief and Incorporation Relief
These let you defer CGT when:
● Reinvesting proceeds in a new qualifying business asset (Rollover Relief), or
● Transferring your business into a company (Incorporation Relief).
Used wisely, these can preserve cash flow and avoid unnecessary upfront tax.
Common Real-Life Mistakes That Trigger HMRC Reviews
From 18 years of reviewing tax cases, here are recurring CGT blunders:
Forgetting crypto trades – especially if done via foreign exchanges.
Incorrectly claiming PRR on second homes or Airbnbs.
Misreporting joint ownership – HMRC expects accurate split by ownership share.
Double-claiming purchase costs on both CGT and income tax.
Missing the 60-day residential deadline — by far the most frequent and costly error.
A simple internal “disposal log” — noting every sale, date, and estimated gain — can prevent these headaches.
Case Study: The Small Business Owner Who Got Caught Out
Let’s look at Raj, who ran a small design consultancy in Birmingham. In 2025, he sold his limited company’s goodwill to a buyer for £180,000. Raj assumed it was all covered by Business Asset Disposal Relief.
Unfortunately, he had stopped being a director six months before the sale — meaning the condition of being an “officer or employee” at disposal was no longer met. HMRC denied relief, and he faced a 20% CGT rate instead of 10%, costing over £9,000 more.
Had Raj sought advice earlier, a quick reappointment as company secretary before the sale would’ve preserved eligibility.
Moral of the story: timing and status checks are everything when applying reliefs.
Step-by-Step: Using the HMRC Tools
If you’re unsure how to report or calculate your gains, start with these official tools:
Work out your gain – a calculator that guides you through costs and rates.
Report and pay Capital Gains Tax – for UK property disposals.
Personal tax account – to view or amend submitted information.
They’re not perfect (I often find the calculators over-simplify mixed ownership cases), but they’re reliable for initial checks.
Professional Tip – Timing Is the Easiest Legal Tax Strategy
None of us loves tax surprises, but timing is the simplest way to manage CGT smartly:
● Split disposals across two tax years to use multiple allowances.
● Transfer ownership to your spouse before sale to double exemptions (see Giving assets to your spouse or civil partner).
● Offset losses before 5 April to reduce taxable gains.
Even something as small as completing a property sale on 6 April instead of 5 April could defer the tax bill by a whole year — a trick I’ve used for many clients juggling cash flow.
UK Capital Gains Tax Calculator
Navigating Complex Capital Gains Tax Scenarios – From Multiple Incomes to Regional Rules (2025/26)
When You’re Not Just an Employee – Balancing Multiple Income Sources
Now, let’s think about your situation. If you’re self-employed, a landlord, or have investment income alongside PAYE earnings, Capital Gains Tax (CGT) doesn’t exist in a vacuum — it’s part of your overall taxable income picture.
HMRC looks at your total taxable income and gains combined when deciding your CGT rate. So even if your capital gain is modest, a freelance job or side hustle could quietly push you into the higher CGT bracket.
Take Ben from Cardiff, for example. He works full-time earning £45,000 a year but also makes £10,000 in freelance design work. That side income nudges his total taxable income to £55,000 — meaning any capital gains are now taxed at higher-rate CGT bands (20% or 24% for property).
You can double-check your total taxable income and allowances using HMRC’s Check your Income Tax for the current year service.
How CGT Interacts with PAYE and Self Assessment
If you’re purely employed and paid via PAYE, your employer handles your income tax — but CGT sits outside PAYE. You’ll only pay it through:
● The 60-day property report, or
● Your Self Assessment return (if you file one).
If you’ve never filed a return before, you can register easily on HMRC’s Self Assessment service.
For the self-employed, CGT and Income Tax are reported together on the same Self Assessment return — but they’re calculated separately. This can make it easier to plan, especially if you’ve got business expenses or trading losses that keep your income below the higher rate threshold.
Case Study: Side Hustle Meets Share Portfolio
Meet Sophie, a marketing consultant earning £40,000, who also trades shares part-time. In January 2026, she sells some tech stocks for a £15,000 gain. Her total taxable income becomes £40,000 + £15,000 = £55,000.
Since she crosses the £50,270 threshold, £5,270 of her gain is taxed at 20%, while the rest (£9,730) stays at 10%. By filing her Self Assessment early and keeping tight records, she’s able to pre-plan her tax bill — avoiding surprises in January.
Tip: If you’re close to the higher-rate threshold, consider maxing out pension contributions or using ISA allowances to reduce your taxable income — keeping your CGT rate lower.
Regional Differences – England, Scotland, and Wales
It’s a common misconception that CGT rates vary by nation — they don’t. Capital Gains Tax remains a UK-wide tax, with the same rates applying whether you live in England, Scotland, Wales, or Northern Ireland.
However, the income tax bands differ in Scotland. Because CGT rates depend partly on your taxable income, Scottish taxpayers can face slightly different crossover points between the basic and higher CGT rates. You can review Scotland’s latest income bands here: Income Tax in Scotland.
So while the CGT rate structure is uniform, your total taxable income might be assessed differently, meaning that a similar income could trigger higher CGT north of the border.
Emergency Tax, Overpayments, and HMRC Adjustments
Let’s tackle one of the more frustrating scenarios I see each year — HMRC corrections after a sale.
Suppose you report a gain via the 60-day property account, pay what you calculate as due, then later include the same transaction in your Self Assessment. HMRC’s systems often automatically recalculate and adjust your total tax bill, occasionally duplicating or under-crediting your payment.
Always keep your payment reference numbers and a screenshot of your property CGT submission. If you suspect an overpayment or duplication, contact HMRC through the Capital Gains Tax helpline and request a formal reconciliation.
And if you’ve overpaid, you can usually claim a refund directly via your personal tax account.
For Business Owners and Investors – CGT in a Commercial Context
As a business owner, CGT can arise not just from selling property or shares, but from disposing of:
● Business goodwill
● Company shares
● Partnership assets
● Land or premises used for trade
When Selling a Business
The timing of contracts and ownership tests matters hugely for claiming Business Asset Disposal Relief (BADR) — see official guidance. You must:
● Own the business or shares for at least two years
● Be an officer or employee at disposal
● Sell trading assets (not investment ones)
Example: The Café Sale
Hannah, who runs a coffee shop in Leeds, sells her business for £300,000 in July 2025. She qualifies for BADR, so her first £1 million of lifetime qualifying gains is taxed at 10% instead of 20%. Her CGT bill: £30,000. Without BADR, it would have been £60,000. That’s £30,000 saved through proper planning and documentation.
What If You Own Multiple Properties?
This is where things get messy — and where even seasoned investors slip up.
If you own several homes, only one qualifies for Private Residence Relief (PRR) — your main home. You can nominate which one counts by writing to HMRC within two years of acquiring the second property (see Private Residence Relief guidance).
Example:
● You live in a London flat but also own a Cornwall holiday cottage.
● You can elect the Cornwall home as your “main residence” if you genuinely occupy it for some part of the year. This choice can save tens of thousands in CGT when you eventually sell.
Advanced Tip – Spouse Transfers Before Sale
This one’s simple but powerful. If you’re married or in a civil partnership, you can transfer assets to your spouse before selling, with no immediate CGT due under Gifts to your spouse or civil partner.
You both then use your £3,000 annual exemptions, potentially halving your joint tax bill.
I’ve helped several clients save thousands this way — but always ensure transfers happen before exchange of contracts, or HMRC may not accept it as valid for the year.
Case Study: The Landlord Couple and Timing Advantage
Richard and Emma, a married couple from Bath, co-own a buy-to-let worth £350,000. They plan to sell in March 2026, with a gain of £50,000.
Their accountant advises transferring an extra 25% ownership from Richard (a higher-rate taxpayer) to Emma (a basic-rate taxpayer) before completion.
Result:
● Richard’s taxable gain reduced, saving 6% in CGT.
● Combined use of two £3,000 exemptions.Net saving of nearly £4,000 — all from correct timing and ownership structuring.
When HMRC Challenges Your Figures
It’s rare, but if HMRC believes your asset valuation or relief claim is off, they can issue a CGT enquiry. Always:
● Keep a written record of how you arrived at your valuation (e.g., estate agent letters or professional appraisals).
● Use HMRC’s Market value guidance if assets were gifted or sold below market price.
● Respond promptly — ignoring letters can escalate to penalties or tribunal cases.
In my experience, 90% of HMRC CGT disputes arise from poor valuation evidence, not deliberate avoidance.
Professional Checklist – Before You Sell Anything
Here’s a pre-sale checklist I share with clients to avoid nasty CGT surprises:
Establish ownership and acquisition cost – including all purchase documents.
Confirm asset type – residential, shares, crypto, or business.
Work out if reliefs apply – PRR, BADR, rollover, or losses.
Check the timing – could delaying or splitting sales save tax?
Verify ownership splits – joint or sole? Update legal documents if needed.
Set aside funds early – don’t spend sale proceeds before tax is accounted for.
Use HMRC’s official tools – e.g. Work out your gain.
Keep every document – 5 years minimum for self-employed.
File and pay on time – 60 days for property, 31 January for all else.
Seek advice before contracts are signed – prevention is far cheaper than correction.
Summary of Key Points
Capital Gains Tax is triggered when you dispose of an asset, not when you receive the money.
→ For property, payment is due within 60 days; for other assets, by 31 January after the tax year.
You’re only taxed on your gain, not the sale proceeds — subtract all legitimate costs first.
2025/26 Annual Exemption is £3,000 (£1,500 for trusts), meaning even small gains can now be taxable.
Rates depend on your income band: 10%/18% for basic rate, 20%/24% for higher/additional.
Spouses and civil partners can transfer assets tax-free before disposal to double exemptions.
Keep meticulous records — HMRC’s systems cross-check property, brokerage, and crypto data.
Use reliefs like Private Residence Relief and Business Asset Disposal Relief where eligible.
Timing matters: spreading sales across tax years can defer or reduce tax legally.
Report on time — 60 days for property, via CGT property account; otherwise through Self Assessment.
When in doubt, get advice early. Tax planning before a sale almost always beats damage control afterward.
FAQs
Q1: Can someone delay paying Capital Gains Tax until the next tax year?
A1: Well, it depends on when the disposal actually happens, not when the money hits your account. The gain is taxed in the year the sale or transfer is legally completed. In my experience, if a property sale completes on 6 April instead of 5 April, you’ve effectively moved the tax bill into the next tax year — giving you up to 12 months’ breathing room.
Q2: How soon must UK homeowners pay Capital Gains Tax after selling a property?
A2: For residential property, the clock starts ticking immediately — you’ve got 60 days from completion to report and pay via HMRC’s digital CGT system. Miss that window and interest starts building. Many clients forget that “exchange” and “completion” are different — only the latter triggers the 60-day deadline.
Q3: Do joint property owners each pay Capital Gains Tax separately?
A3: Yes, each co-owner calculates and reports their share of the gain independently. Suppose a couple sells a second home and each owns 50%. Each applies their own annual CGT allowance and pays tax based on their personal income tax band.
Q4: What if someone sells a property at a loss — can it still help with tax?
A4: Definitely. A realised capital loss can offset other gains in the same year, or you can “bank” it to offset against future gains. I’ve seen smart investors intentionally crystallise small losses in March to trim down a big gain before 5 April.
Q5: Is Capital Gains Tax different in Scotland and Wales?
A5: The CGT system itself is UK-wide — the same rates and exemptions apply — but remember, income tax rates differ in Scotland and Wales, which can affect which CGT band you fall into. So a Scottish taxpayer on a higher income might hit the 24% property rate sooner than someone in England.
Q6: Can selling cryptocurrency trigger Capital Gains Tax in the UK?
A6: Yes, and it’s one of the biggest surprises for casual investors. HMRC treats most crypto disposals — even swapping one token for another — as taxable events. I had a client who didn’t cash out a penny but still owed several thousand because he traded between coins during a bull run.
Q7: Do you pay Capital Gains Tax when giving assets to family?
A7: Usually yes, because HMRC sees gifts (other than to your spouse or civil partner) as if you sold the asset at market value. So if you gift your adult child a buy-to-let flat that’s doubled in value, you’ll owe CGT on the notional gain. Gifting between spouses is exempt, which is often a planning opportunity.
Q8: What happens if someone forgets to report a property gain within 60 days?
A8: It’s a common slip-up. HMRC will charge late-filing penalties plus daily interest on the unpaid tax. I’ve seen clients manage to appeal if they had genuine technical issues or illness, but generally, “I didn’t realise” doesn’t wash. Best to act quickly and disclose voluntarily.
Q9: How does Capital Gains Tax work if you inherit a property?
A9: Inheritance itself isn’t taxed under CGT — the gain resets to market value at the date of death. But when you later sell that inherited asset, the difference between that value and your sale price becomes taxable. Executors often miss this and underreport.
Q10: Do small business owners pay Capital Gains Tax when selling their company?
A10: Yes, but if structured correctly, they might only pay 10% under Business Asset Disposal Relief. The key is timing — you must be a company officer or employee and own at least 5% of the business for two years up to the sale. I once helped a director reappoint themselves weeks before completion just to keep that relief intact.
Q11: How does Capital Gains Tax apply to selling shares or investments?
A11: Gains from shares, unit trusts, and investment funds all count. What’s often overlooked is that your broker fees and acquisition costs reduce the taxable gain — and if you reinvest dividends, your “base cost” may be higher than you think.
Q12: Can someone offset property renovation costs against Capital Gains Tax?
A12: Only if the works add lasting value — think extensions, new bathrooms, or loft conversions. Cosmetic redecorating or maintenance (like replacing carpets) doesn’t qualify. One of my clients once submitted every B&Q receipt — HMRC rejected most of it within minutes.
Q13: How does Capital Gains Tax interact with someone’s income tax bracket?
A13: The rate you pay on gains depends on your total taxable income. HMRC essentially stacks your gains “on top” of your income, so high earners drift into the 24% or 20%+ rates faster. This is why timing and splitting disposals across tax years can save thousands.
Q14: Can a self-employed person claim business equipment as a capital asset?
A14: It depends — if it’s used in the business and sold later, that sale can create a capital gain or loss. However, most equipment is covered under capital allowances instead. I often see freelancers accidentally double-claim depreciation and capital costs — which HMRC will claw back.
Q15: What if someone has multiple jobs and a property sale — does that change their CGT?
A15: Absolutely. Multiple income sources push you into higher tax brackets, increasing the CGT rate that applies to your gain. So if a PAYE worker takes on a lucrative side hustle, it might unexpectedly nudge their property sale into the 24% band.
Q16: Are there Capital Gains Tax reliefs for landlords selling rental properties?
A16: Very few now, but Private Residence Relief still applies if the property was your main home at any time, plus the final nine months of ownership. A small number of landlords might still qualify for limited Lettings Relief if they shared occupation with tenants.
Q17: Does selling a business asset to your own company trigger Capital Gains Tax?
A17: Yes, unless you use Incorporation Relief or Rollover Relief. Transferring assets like goodwill or property into your company counts as a disposal. Many sole traders are caught off-guard when they incorporate without planning the tax consequences first.
Q18: What if someone realises they underpaid CGT years later?
A18: Best approach? Come clean via HMRC’s voluntary disclosure route. If you proactively correct it, penalties are far lower. I’ve guided clients through this — honesty upfront saves stress and often reduces fines to minimal amounts.
Q19: Can pension withdrawals affect Capital Gains Tax?
A19: Indirectly, yes. A large pension drawdown increases your total income for the year, pushing your CGT rate up. I’ve seen retirees trigger higher CGT unexpectedly after taking out lump sums. It’s often worth spacing pension withdrawals to manage your overall bracket.
Q20: What’s the simplest way to check if Capital Gains Tax has been overpaid?
A20: Log into your HMRC personal tax account and review submitted figures. Overpayments happen if losses were missed or reliefs misapplied. I once recovered over £1,200 for a client who forgot to claim their spouse’s unused annual exemption — simple oversight, big win.
About the Author
About the Author:
Adil Akhtar, ACMA, CGMA, serves as CEO and Chief Accountant at Pro Tax Accountant, bringing over 18 years of expertise in tackling intricate tax issues. As a respected tax blog writer, Adil has spent more than three years delivering clear, practical advice to UK taxpayers. He also leads Advantax Accountants, combining technical expertise with a passion for simplifying complex financial concepts, establishing himself as a trusted voice in tax education.
Email: adilacma@icloud.com
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