Capital Gains Tax 101: What Every UK Taxpayer Needs to Know

If you’ve ever sold an asset — whether it’s a second property, shares, or even valuable collectibles — you might have heard the term Capital Gains Tax (CGT) thrown around.

But what exactly is it, and why does it matter to you? Let’s break it down in simple terms.

What is Capital Gains Tax (CGT)?

At its core, CGT is a tax on the profit you make when you sell or dispose of an asset. It’s not about the total amount you sell it for, but the gain — the difference between what you paid for the asset and what you sell it for. For example, if you bought a painting for £1,000 and later sold it for £5,000, the gain would be £4,000, which may be subject to CGT. 💷

Not every sale triggers CGT. There are also allowances and reliefs that can reduce your CGT bill, including the annual tax-free allowance (£6,000 for individuals in 2025/26) and reliefs for business assets or inherited property.

Assets That Could Trigger CGT:

• Second homes or buy-to-let properties 🏠

• Shares and investment funds 📈

• Valuable collectibles (art, antiques, rare coins, jewellery) 🖼️💍

• Business assets and shares in private companies 💼

• Cryptocurrency and digital assets 💻💰

• Land or property that isn’t your main residence 🌳

Assets That Are Generally Exempt from CGT:

• Your primary home (under Private Residence Relief rules) 🏡

• Personal possessions under £6,000 in value (per item) 🎨📚

• ISAs and certain pensions 🏦

• Government bonds and gilts 💷

• Gifts to spouses or civil partners 💑

• Certain charity donations 🎗️

Capital Gains Tax Explained

It’s important to know that CGT applies when you “dispose” of an asset, which isn’t just selling it. Disposal can also include gifting assets, exchanging them for something else, or transferring them in certain circumstances.

The rules can get complex, and that’s where expert advice can make a real difference in minimising your tax liability and staying compliant.

Understanding Disposals

At The Tax Faculty, we specialise in helping UK taxpayers navigate the often confusing world of CGT. Whether it’s property, investments, or other valuable assets, our team ensures you understand your position, claim all available reliefs, and meet HMRC obligations — all while keeping the process as clear and stress-free as possible.

Understanding CGT doesn’t have to be intimidating. By getting informed early and seeking advice where needed, you can take control of your tax position and avoid costly mistakes.

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