-
Resources
-
News
-
Firm News
If you are planning to sell, gift or transfer assets in the near future, it is worth understanding what needs to be reported and when, so you don’t get caught out by Capital Gains Tax (CGT) charges.
Knowing the basics early on can help you avoid missed deadlines and unexpected penalties.
When does CGT apply?
CGT is charged on the profit made when an asset is sold or otherwise disposed of by gift or transfer of ownership.
Typical scenarios where CGT will apply include:
- Selling a UK or overseas property that is not your main residence
- Disposing of shares (this does not include shares in an ISA).
- Selling valuable personal possessions worth more than £6,000 (excluding cars).
- Selling or transferring business assets.
Where an asset is jointly owned, each owner will only be taxed on their share of the gain.
The annual allowance for CGT
Each individual has a tax-free allowance known as the annual exempt amount. For the 2025/26 and 2026/27 tax year, this is £3,000. Trusts only have half of this allowance at £1,500.
Tax is only payable on gains above the allowance once losses and any reliefs have been taken into account.
What are the CGT rates?
The rates depend on your Income Tax band and the type of asset sold. There have been a few increases to the CGT rates in the last couple of years, so it’s a good idea to refamiliarise yourself with the rates before making any decisions about selling your assets.
For disposals from 6 April 2025:
- 18 per cent applies to basic rate taxpayers
- 24 per cent applies to higher and additional rate taxpayers
- 32 per cent applies to carried interest
Where a claim for Business Asset Disposal Relief or Investors Relief is made, the CGT rate increases from 14 per cent to 18 per cent for disposals on or after 6 April 2026.
If you are not sure which rate applies to you, our experts can advise you.
You must report disposals in your Self-Assessment tax return if total proceeds exceed £50,000, even where no tax is due.
CGT changes for Employee Ownership Trusts
Owners selling shares to an Employee Ownership Trust (EOT) have benefited from 100 per cent relief on the gain in recent years.
However, from April 2026, this relief will be capped at 50 per cent, meaning half of the profit will be taxable.
EOT arrangements can still offer advantages, including tax-free employee bonuses of up to £3,600 per year and continuity of ownership.
Nevertheless, specialist advice is recommended before choosing EOTs to make sure it is a good fit for your business.
What are the reporting deadlines for CGT?
Responsibility for reporting sits with the taxpayer, as HMRC will not automatically issue an assessment.
The reporting deadline will usually depend on the type of disposal.
For example, gains on the sale of UK residential property that isn’t your primary home must be reported within 60 days if you are a UK tax resident and have tax to pay.
For the disposal of other assets, you will typically report this through the Self-Assessment tax return for the relevant tax year.
Losses should be reported to ensure they can be carried forward and used against future gains.
If you are a non-UK resident, you must report all disposals of UK land and property within the 60-day window, even if there is no tax payable.
However, for other assets, such as shares in a UK company, a charge will usually only arise if you return to the UK within five years of departure or if the company derives most of its value (75 per cent or more) from UK land and the conditions for an indirect disposal are met.
When is CGT not required?
Some disposals fall outside the Capital Gains Tax rules.
These include:
- Transfers between spouses or civil partners
- Gifts to registered charities
- Gains made within ISAs or similar tax-efficient accounts
- UK government gilts and Premium Bonds
- Betting or lottery winnings
If you are not sure whether your disposal will incur CGT, get in touch for advice.
Is record-keeping required for CGT?
Keeping accurate records makes it much easier to calculate a gain and support the figures reported.
You should retain:
- Evidence of the purchase price and date
- Sale proceeds and completion statements
- Invoices for legal fees, Stamp Duty and professional costs
- Details of improvement expenditure
- Contracts, valuations and supporting correspondence
Individuals should normally keep their records for up to six years. Businesses are also generally required to retain accounting records for a minimum of six years.
In some circumstances, HMRC can look back further, so keeping records for longer may be prudent.
CGT penalties
If reporting deadlines are missed or tax is paid late, penalties can apply.
A late return usually starts with a £100 charge, with further penalties added the longer it remains outstanding.
Late payment triggers percentage-based charges after 30 days, six months and 12 months, plus interest until the balance is cleared.
Errors in a return can also lead to penalties, with higher charges where mistakes are considered careless or deliberate by HMRC.
You can find out more about the penalties here.
Get support with CGT planning
If you are selling assets and need guidance on the tax implications, we are happy to help you understand your reporting obligations and advise you on any available reliefs to reduce your tax liabilities.
Contact our team to arrange a conversation and get the clarity you need on asset sales.