UK Capital Gains Tax 2025 — Property & Investment Rules Explained
Meta Description: Explore the UK Capital Gains Tax rules for 2025, including property disposal rates, investment asset allowances and planning strategies.
1️⃣ Introduction / Overview
In 2025 the UK’s Capital Gains Tax (CGT) rules continue to evolve. CGT is levied on the profit (“gain”) when you dispose of an asset that has increased in value. This guide explains how CGT applies to property and other investments, the key rates and allowances for 2025, and how you might plan accordingly.
2️⃣ What is CGT & when does it apply?
CGT arises when you dispose of (sell, gift, transfer) certain chargeable assets and make a gain. Common cases include:
- Investment property (that is not your main home)
- Shares and other assets outside tax-sheltered accounts
- Business assets (in some cases)
You only pay CGT on the *gain* (sale price minus cost, minus allowable deductions) after your annual exempt allowance.
3️⃣ Key rates & allowances for 2025
The CGT landscape for the tax year starting 6 April 2025 features the following important figures:
| Item | Value / Rate | Notes |
|---|
| Annual exempt allowance | £3,000 | For 2025/26 the allowance is £3,000 for individuals. |
| Residential property CGT rate (basic-rate taxpayer) | 18% | Gain taxable at 18% if total income + gain stays within basic rate band. |
| Residential property CGT rate (higher-rate taxpayer) | 24% | For gains above basic rate band. |
| Other chargeable assets CGT rate | 18% / 24% | Same bands as above apply to many non-property assets. |
| Business Asset Disposal Relief rate | 14% (from 6 Apr 2025) | Reduced relief rate applies for qualifying disposals. |
Example: If your taxable income is £20,000 and you make a gain of £12,600 on a non-property asset after 6 April 2025 — subtract allowance (£3,000) = £9,600 taxable gain; all falls into basic rate band → taxed at 18%.
4️⃣ Special considerations: Property & Investment rules
📌 Property: When you sell a second home, rental property or other non-primary residence you’ll likely face CGT. The allowance is small (£3,000) and rates start at 18%.
📌 Main home relief: If the property has been your main residence the Private Residence Relief may apply to reduce or eliminate CGT.
📌 Investment assets: Shares, art, second homes and other chargeable assets follow the standard CGT band rates. Transfers between spouses are generally exempt, allowing planning flexibility.
📌 Reporting & payment deadlines: For UK residential property disposals, the gain must be reported and CGT paid within 60 days of completion.
5️⃣ Planning & mitigation strategies
Here are some practical tactics (for information only, not tax advice):
- Use your £3,000 annual allowance each year. Dividing sales across tax years may reduce liability.
- If married or in a civil partnership, transferring assets to your spouse before disposal may allow both allowances and possibly a lower rate for one party.
- Consider timing disposals when your taxable income is lower — part of the gain may sit in basic-rate band (18%) instead of higher band (24%).
- Make sure to deduct allowable costs: purchase and sale costs, improvements (not maintenance) may reduce your gain.
- If selling business assets qualified for relief (e.g., Business Asset Disposal Relief), ensure you meet the conditions and note the relief rate changes.
FAQs
Q1. Do I always pay CGT when selling my home?
A1. No — if it has been your main residence for the whole time and you qualify for Private Residence Relief then you may not owe CGT. For second homes or lets the relief may be limited.
Q2. What happens if I sell shares and make a gain of £2,500 in 2025/26?
A2. Since the annual exempt allowance is £3,000, a gain of £2,500 would fall within it and you would not pay CGT on that amount (assuming no other gains).
Q3. What rate applies if I’m a higher-rate taxpayer and dispose of an investment property?
A3. For residential property the rate is 24% for gains falling above the basic rate threshold. For other assets the 24% rate also applies.
Conclusion
For the UK tax year starting 6 April 2025, CGT rules emphasise lower allowances (£3,000) and defined rates (18% basic / 24% higher) for most assets. Understanding the treatment of property and investment disposals, reporting obligations and planning opportunities is essential to avoid surprise tax bills. Always consider your personal circumstances and consult a qualified adviser for tailored advice.
References
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