How and When to Pay Capital Gains Tax: Everything You Need to Know

Capital gains tax has been making headlines for all the wrong reasons lately. 

The Chancellor’s October 2024 Budget delivered a nasty shock – rates jumped from 10% and 20% to 18% and 24% almost overnight. 

The annual allowance has also been slashed to just £3,000, down from £12,300 a couple of years ago. For many people, this means substantially higher tax bills on their investments and property sales.

CGT has always been confusing, which isn’t helped by the fact that different rules apply depending on whether you’re selling shares, property, or other assets. 

Property sales have a strict 60-day reporting deadline, while other gains can be reported later. Some people need to file standalone returns, others report through self-assessment, and some unlucky souls end up doing both…

Getting this wrong is expensive, but understanding the rules properly can save you money and help you plan your disposals more effectively. 

Here’s what you actually need to know about reporting and paying capital gains tax in 2025:

The New Rates: What Changed and When

The October 2024 Budget delivered an immediate shock to anyone with investments outside ISAs and pensions. The government didn’t give people time to plan – the changes took effect from 30 October 2024, the day of the announcement.

For assets other than residential properties and carried interest, the main rates for Capital Gains Tax changed from 10% and 20%, to 18% and 24%, respectively, effective from 30 October 2024.

This means if you sold shares or other investments after that date, you’re paying the higher rates. The timing was deliberately designed to prevent people rushing to sell assets before the changes took effect.

Current CGT rates for 2025/26:

• 18% if your total taxable income and gains are within the basic rate band (£37,700)
• 24% on any gains that push you above the basic rate band
• Residential property: 18% and 24% (unchanged from previous rates)
• Business Asset Disposal Relief: 14% from April 2025, rising to 18% from April 2026

The annual allowance remains at £3,000 for the 2025 to 2026 tax year, meaning you can make tax-free gains up to this amount before CGT kicks in.

What Actually Triggers Capital Gains Tax

Understanding what counts as a disposal for CGT purposes is crucial because the rules catch more situations than most people realise. It’s not just about selling assets for cash.

Capital gains tax kicks in when you dispose of an asset for more than you paid for it. “Dispose” doesn’t just mean selling – it includes giving assets away, transferring them to someone else, or even having them destroyed or stolen.

The most common triggers are:

• Investment assets like shares, unit trusts, and investment bonds outside ISAs and pensions. Even switching between funds within the same provider can trigger CGT if it’s outside a tax wrapper.
• Property including buy-to-let properties, second homes, commercial property, and sometimes even your main home if you’ve not lived in it throughout your ownership or used part of it for business.
• Valuable personal possessions worth more than £6,000, including antiques, art, jewellery, and classic cars. Your everyday car is usually exempt, but a vintage Ferrari probably isn’t.
• Business assets including selling a business, business premises, or qualifying shares in trading companies.
• Cryptoassets like Bitcoin and other cryptocurrencies when you sell, exchange, or spend them.

Your main home is usually exempt from tax thanks to private residence relief, but this doesn’t apply if you’ve rented it out, used it for business purposes, or it’s very large with substantial grounds. 

Read our full guide to scenarios when you need to consider CGT here. 

The Reporting Maze: Different Rules for Different Assets

The reporting requirements are where most people get confused, and it’s easy to see why. 

HMRC has established distinct rules for various types of assets, with differing deadlines and reporting requirements.

This is where it gets complicated. The reporting requirements depend on what you’ve sold, when you sold it, and the amount you earned.

UK Property: The 60-Day Rule

If you’re a UK resident selling UK residential property and there’s tax to pay, you must submit capital gains tax on a UK property return and pay the capital gains tax due within 60 days of the completion date.

This applies to second homes, buy-to-let properties, and any residential property that doesn’t qualify for full private residence relief. The 60-day deadline is strict – a fixed penalty is imposed by HMRC if you do not file your return within 60 days, followed by daily penalties.

There’s one exception: if you can file your annual self-assessment tax return within the 60-day window, you don’t need the separate property return. This sometimes happens when property transactions span tax years.

Other Assets: Self-Assessment or Real-Time Reporting

For shares, investments, and other non-property assets, you have more flexibility in how and when you report. The real-time reporting service provides an alternative to waiting for your annual tax return.

You can either:

• Report through self-assessment if you normally file a tax return. Your gains (before deducting any losses) for the year are more than the annual exempt amount (£3,000 for 2025/26 and 2024/25) or Your sales proceeds are more than £50,000, even if your gains are less than the annual exempt amount.
• Use the real-time reporting service if you don’t normally file a tax return. This online service lets UK residents report gains by 31 December in the tax year after you made your gain and pay by 31 January. However, this service cannot be used for UK residential property disposals – those must follow the 60-day rule.

When You Need to Do Both

This catches many people out because they assume filing one return covers their obligation. In reality, some disposals require multiple reporting routes.

Sometimes you’ll need to report the same disposal twice. If you sell UK property and file the 60-day return, you still need to include the details in your annual self-assessment if you’re registered for that. 

The tax gets reconciled at that point, so you won’t pay twice, but both filings are mandatory.

How to Calculate What You Owe

The calculation itself follows a logical process, but getting the details right can save you hundreds or thousands of pounds in unnecessary tax.

The basic calculation is straightforward: selling price minus buying price minus allowable costs equals your gain. Then you deduct your annual allowance and apply the appropriate rate.

But the devil is in the details:

• Allowable costs include the original purchase price, stamp duty, legal fees, estate agent fees, and improvement costs (but not repairs or maintenance). For inherited assets, your starting point is usually the market value when you inherited it.
• The rate depends on your total income. Add your taxable gains to your other taxable income for the year. If the total is within the basic rate band (£37,700 for 2025/26), you pay the lower CGT rate. Anything above pays the higher rate.
• Losses can be offset against gains in the same year or carried forward to future years. You must use losses in the most tax-efficient way – against gains that would otherwise be taxed at the highest rates.
• Reliefs can reduce or eliminate the tax. Private residence relief protects your main home, while Business Asset Disposal Relief can reduce rates on qualifying business assets.

Help from an accountant can be key, especially for complex or high-value disposals. 

Common Mistakes That Cost Money

Even experienced investors and property owners fall into these traps, often because the rules have changed or they’re making assumptions based on outdated information. Here are some CGT mistakes to watch out for:

• Missing the 60-day property deadline is expensive. Even if you eventually report through self-assessment, the penalties still apply. Set a diary reminder for the completion date and don’t rely on your solicitor to tell you about CGT obligations.
• Forgetting about the annual allowance when making multiple disposals. You can use your £3,000 allowance against any gains in the tax year, so plan which gains to realise to make best use of it.
• Not claiming all allowable costs: Keep detailed records of purchase costs, legal fees, and improvement expenses. For older assets, track down old invoices and bank statements – they could save you hundreds in tax.
• Assuming your main home is always exempt: If you’ve rented out part of it, used it for business, or haven’t lived there throughout your ownership, you might have a CGT liability.
• Not using losses effectively: Capital losses can only be offset against capital gains, not other income (except in very limited circumstances). But you can choose which gains to offset them against for maximum tax efficiency.

Again, if you’re ever unclear about the CGT process, expert help is valuable, so reach out. 

What Records You Need to Keep

HMRC’s enquiry powers mean you need to maintain comprehensive records for several years after any disposal. Poor record-keeping is one of the most expensive mistakes you can make.

HMRC can enquire into CGT returns for up to four years after filing (or up to 20 years in cases of deliberate non-disclosure), so keep detailed records:

• Purchase documentation, including contracts, bank statements, and solicitors’ bills, showing the original cost and associated expenses.
• Maintain records of capital improvements, including invoices and receipts, that add value to the asset (excluding repairs and maintenance).
• Disposal documentation, including sale contracts, estate agent details, and legal costs.
• Market valuations for inherited or gifted assets, ideally from qualified valuers at the relevant dates.
• Loss claims with calculations and supporting evidence if you’re carrying losses forward.

Keep digital copies as well as physical records – HMRC accepts electronic records, and they’re easier to organise and search.

Your CGT Reporting Checklist

Here’s a practical guide to help you work out what you need to do and when, based on what you’ve sold and your specific circumstances.

Get Help With CGT From Double Point

The higher CGT rates mean getting your reporting right is more important than ever. But with proper attention to deadlines and accurate calculations, you can avoid costly penalties and ensure you’re paying exactly what you owe.

At Double Point, we help clients understand the many nuances of capital gains tax, from calculating liabilities to meeting reporting deadlines and claiming available reliefs. 

The rules are complex and the penalties for getting it wrong are substantial, but with professional guidance, you can ensure compliance while minimising your tax burden. 

Book a consultation with us today to discuss your specific situation and how we can help you manage your CGT obligations effectively.