CGT Allowance 2024/25: How Much Is Capital Gains Tax and What’s Changing?
- Apr 3
- 3 min read
Capital Gains Tax (CGT) affects many people who sell assets such as property, shares, or valuable items. Understanding the CGT allowance and the changes coming in 2024/25 is crucial for planning your finances and avoiding unexpected tax bills. This post breaks down how much CGT you might owe, what the allowance means, and the key updates for the new tax year.
What Is Capital Gains Tax and Who Pays It?
Capital Gains Tax is a tax on the profit you make when you sell or dispose of an asset that has increased in value. The tax applies only to the gain, not the total amount you receive. For example, if you bought shares for £5,000 and sold them for £8,000, you would pay CGT on the £3,000 gain.
You usually pay CGT if you sell:
Property that is not your main home
Shares or investments
Valuable items like art, antiques, or jewelry
Some assets are exempt, such as your primary residence (under certain conditions), personal belongings worth less than £6,000, and ISAs.
Understanding the CGT Allowance for 2024/25
The CGT allowance, also called the Annual Exempt Amount, is the amount of profit you can make before you start paying tax. For the tax year 2024/25, the allowance has been set at £6,000. This is a reduction from the previous year’s allowance of £12,300.
This change means you will pay CGT on smaller gains than before. For example, if you make a gain of £7,000 in 2024/25, you will pay tax on £1,000 after using your £6,000 allowance.
How Much CGT Will You Pay?
The rate of CGT depends on your total taxable income and the type of asset you sell. There are two main rates for individuals:
10% on gains if you are a basic-rate taxpayer
20% on gains if you are a higher or additional-rate taxpayer
For residential property gains, the rates increase to 18% and 28% respectively.
Example
If you are a higher-rate taxpayer and sell a second home with a gain of £50,000 in 2024/25:
Deduct the £6,000 allowance → taxable gain is £44,000
CGT rate is 28% → tax due is £12,320
What’s Changing in 2024/25?
The main change is the halving of the CGT allowance from £12,300 to £6,000. This means more people will have to pay CGT on smaller gains.
Other important points include:
The allowance is set to reduce further to £3,000 in 2025/26.
The government aims to raise more revenue from capital gains.
No changes have been announced to the CGT rates themselves for 2024/25.
Reporting and payment deadlines remain the same.
These changes make it more important to plan your asset sales carefully and consider timing to minimise tax.
Tips to Manage Your CGT Liability
Here are some practical steps to reduce your CGT bill:
Use your allowance fully: Spread asset sales over multiple tax years to use the allowance each year.
Offset losses: If you have made losses on other assets, use them to reduce your gains.
Transfer assets to a spouse: Transfers between spouses are exempt from CGT, allowing you to use both allowances.
Consider timing: Delay sales until after 6 April 2025 if possible, when the allowance drops again.
Keep good records: Track purchase prices, sale prices, and related costs to calculate gains accurately.
When and How to Report CGT
If your gains exceed the allowance, you must report and pay CGT within 60 days of selling the asset. This applies to residential property and other chargeable assets.
You can report CGT through the HMRC online service or by including it in your Self Assessment tax return.
Final Thoughts on CGT Allowance 2024/25
The reduction in the CGT allowance means more people will face capital gains tax on smaller profits. Understanding how much CGT you owe and planning your asset sales can save you money and stress. Use your allowance wisely, keep detailed records, and consider professional advice if you have complex investments.
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