A Simple Guide to Capital Gains Tax in the UK

Capital Gains Tax (CGT) is a tax that many people don’t think about—until they’re suddenly facing a large bill! Whether you’re selling a property, shares, or a valuable asset, understanding CGT can help you plan ahead, minimise your liability, and avoid costly mistakes.

At Black & White Accounting, we make tax simple. We handle the complexities of Capital Gains Tax so you can focus on what you do best—running your business and growing your wealth. Here’s everything you need to know about CGT and how to reduce your tax bill legally.

What is Capital Gains Tax (CGT)?

Capital Gains Tax is a tax on the profit (gain) you make when you sell or dispose of an asset that has increased in value. It’s not the total sale price that’s taxed, just the gain.

Common Assets Subject to CGT

✅ Property (excluding your main home in most cases) ✅ Shares and investments (outside of ISAs or pensions) ✅ Business assets ✅ Valuables such as art, antiques, and collectibles

If you gift an asset (other than to your spouse or a charity), you may also need to pay CGT.

Capital Gains Tax Rates for 2024/25

The CGT rate depends on what you’re selling and your income tax band:

📌 For Residential Property (not your main home):

• 18% (Basic rate taxpayers)
• 24% (Higher/Additional rate taxpayers)

📌 For Other Assets (Shares, Business Assets, etc.):

• 10% (Basic rate taxpayers)
• 20% (Higher/Additional rate taxpayers)

🔹 Tax-Free Allowance: You can make £3,000 tax-free in capital gains before CGT applies (2024/25). This has been reduced from previous years, making tax planning even more important!

How to Calculate Capital Gains Tax

Work Out Your Gain

Sale Price – Original Purchase Price – Allowable Costs = Capital Gain

Example:

• You bought a second property for £200,000.
• You sell it for £300,000.
• Your gain is £100,000.
• If you’re a higher-rate taxpayer, you’d pay 24% on £97,000 (after the £3,000 allowance) = £23,280 in CGT.

Ways to Reduce Your Capital Gains Tax Bill

✅ Use Your CGT Allowance – Sell assets strategically over different tax years to maximise tax-free gains. ✅ Transfer Assets to a Spouse – Married couples and civil partners can transfer assets tax-free, allowing them to double their CGT allowance. ✅ Offset Capital Losses – If you make a loss on an asset, you can offset it against your gains, reducing your tax bill. ✅ Claim Private Residence Relief – If selling your main home, you may qualify for full CGT relief. ✅ Use Tax-Efficient Investments – ISAs, pensions, and certain business reliefs can help shield investments from CGT. ✅ Consider Business Asset Disposal Relief (BADR) – If you’re selling a business, you may pay just 10% tax on gains up to £1 million. ✅ Utilise Roll-Over Relief – If you reinvest proceeds from the sale of a business asset into a new qualifying asset, you can defer CGT until you sell the new asset. ✅ Use Hold-Over Relief – If gifting business assets or shares in a trading company, you may defer CGT until the recipient disposes of the asset.

When and How to Report CGT to HMRC

📅 If you sell a residential property, you must report and pay CGT within 60 days. 📅 For other assets, CGT is reported in your Self-Assessment Tax Return by 31 January following the tax year.

Failing to report on time can result in penalties and interest, so it’s crucial to stay ahead!

How Black & White Accounting Can Help

Capital Gains Tax doesn’t have to be a headache—we’re here to help you keep more of your money while staying fully compliant with HMRC. Here’s what we do:

✔️ Tax Planning Advice – We help you structure asset sales to minimise CGT liability. ✔️ Calculations & Reporting – We handle the calculations, ensuring you never overpay. ✔️ Reliefs & Allowances – We identify every possible exemption or relief you’re entitled to, including Roll-Over and Hold-Over Relief. ✔️ HMRC Compliance – We ensure timely and accurate reporting, so you avoid penalties.

Plan Ahead & Save on Capital Gains Tax!

Smart tax planning can save you thousands in unnecessary CGT payments. Whether you’re selling property, investments, or business assets, having a professional on your side makes all the difference.

📞 Get in touch with Black & White Accounting today and let’s make sure your capital gains are managed the right way!