Capital Gains Tax
A tax on the profit (gain) you make when you sell or dispose of an asset that has increased in value, such as shares, investment property, or business assets. The gain is calculated as the sale proceeds minus the original cost and allowable expenses. Rates vary depending on your income and the type of asset — residential property attracts higher rates than other assets.
Related Terms
Annual Exempt Amount
The amount of capital gains you can make in a tax year before Capital Gains Tax becomes due, currently £3,000 for individuals.
Business Asset Disposal Relief (BADR)
A Capital Gains Tax relief on qualifying business disposals — charged at a flat rate of 10% for 2024/25, 14% for 2025/26, and 18% from April 2026 — up to a £1 million lifetime limit per individual.
Investors' Relief
A Capital Gains Tax relief that applies a reduced flat rate on gains from disposing of shares in unlisted trading companies, aimed at encouraging external investors in small businesses.
Residential Property CGT
Capital Gains Tax on gains from selling UK residential property that is not your main home, charged at 18% for basic-rate taxpayers and 24% for higher- and additional-rate taxpayers.
Effective Rate
The average rate of tax you pay across all your income, calculated by dividing your total tax bill by your gross income.
Try the calculator
Use our free tool to see how capital gains tax affects your tax.