Capital Gains Tax: Everything You Need to Know
What is Capital Gains Tax?
Capital Gains Tax (CGT) is a tax on the profit you make when you sell or dispose of an asset that has increased in value. It's the gain you make that's taxed, not the amount of money you originally spent on the asset.
Rates for Capital Gains Tax
The CGT rate you use depends on your total amount of taxable income. The current rates are as follows:
- Basic rate taxpayers: 10%
- Higher rate taxpayers: 20%
The CGT allowance for 2024-25 is £3,000, which is half of what it was in 2023-24. This means that you can make up to £3,000 of profit from an asset this tax year before any tax is payable.
How to File for Capital Gains Tax
You need to file a Self-Assessment tax return to report any capital gains you have made. The deadline for filing your return is 31st January following the end of the tax year (5th April to 5th April).
You can file your return online or by post. If you file online, you will need to create a Government Gateway account. Once you have logged in, you can follow the instructions to complete your return.
If you file by post, you will need to download and complete a Self-Assessment tax return form. You can find the form on the HMRC website.
Paying Capital Gains Tax
You need to pay any capital gains tax due by 31st January following the end of the tax year. You can pay online, by post, or by phone.
If you pay online, you will need to use the HMRC's online payment service. You can find the link to the service on the HMRC website.
If you pay by post, you will need to send a cheque or postal order to HMRC. You can find the address to send your payment to on the HMRC website.
If you pay by phone, you will need to call HMRC on 0300 200 3310.You can call between 8am and 4pm, Monday to Friday.
What if I Don't Pay My Capital Gains Tax on Time?
If you don't pay your capital gains tax on time, you may be charged interest and penalties. The amount of interest and penalties you will be charged will depend on how late you are in paying your tax.
Getting Help with Capital Gains Tax
If you need help with capital gains tax, you can contact HMRC on 0300 200 3310 or visit their website.
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