Capital Gains Tax
Capital Gains Tax (CGT) is a tax on the profit made when you sell or dispose of an asset that has increased in value. It is charged only on the gain - the difference between the amount you paid for the asset and the amount you sold it for - not on the total sale price.
Which assets are subject to CGT?
Capital Gains Tax may apply to a wide range of assets, including but not limited to:
- Stocks and shares
- Cryptocurrency
- Personal possessions worth over £6,000
- UK land and property (excluding your main residence)
- Shares in your personal company
Companies are subject to corporation tax on their chargeable gains.
How is CGT Calculated and when is it paid?
You’ll only pay CGT if your total gain exceeds the Annual Exempt Amount (AEA) for the tax year. The chargeable gain is calculated by subtracting the original purchase cost and any allowable expenses (such as legal or professional fees) from the sale proceeds.
The rate of CGT depends on two main factors:
- The type of asset being sold
- Your personal income tax band (basic or higher/additional rate)
Higher-rate taxpayers typically pay more CGT than those in the basic-rate band.
Strategies to Minimise your CGT liability
With effective planning, CGT liabilities can often be reduced, deferred, or avoided altogether. Common reliefs and strategies include:
- Business Asset Disposal Relief (“BADR”): Reduced CGT rates when disposing of qualifying business assets
- Incorporation Relief: Defer CGT when transferring a business into a limited company.
- Gift Holdover Relief: Defer or eliminate CGT when gifting certain assets to individuals or trusts.
- Private Residence Relief: Exempts gains made on the sale of your primary residence from CGT.
Why is CGT important?
CGT affects a broad range of asset disposals and is a key consideration in personal and business financial planning. With legislation frequently changing, it’s vital to stay informed and ensure you’re making the most of available reliefs and allowances.
Why Stratos?
At Stratos, we are experts in understanding the ever-evolving landscape of CGT. Our team provides expert, personalised advice to help you understand your obligations and minimise your tax liability.
We offer:
- Accurate calculations in full compliance with HMRC requirements
- Expert advice on reliefs, exemptions, and strategic planning
- End-to-end support for CGT reporting and submissions
- Practical strategies to delay or reduce your CGT payments
FAQs
Rates vary depending on your income tax band and the type of asset. If you’re unsure which rate applies to your situation, we’re here to help you understand your position and explore ways to reduce your liability.
Yes. Transfers between spouses and civil partners are typically exempt from CGT. This can be an effective strategy to maximise both partners’ AEA. However, CGT may apply when the recipient eventually sells the asset, based on the original purchase price.
UK residents are liable for CGT on the disposal of worldwide assets. Non-residents may still be liable for CGT on UK-based assets. If you’re unsure about your residency status or are thinking about becoming non-UK resident, we can provide tailored advice for your situation.
There are various allowances and reliefs available to reduce CGT liability, which can be applied based on your specific circumstances. By consulting with Stratos, we can help you take full advantage of these allowances to minimize your CGT.
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Thomas Corcoran
Tax Associate
Tom became a member of the team at Stratos in October 2025, after graduating from the University of Durham with a master’s degree in Mathematics.
