Capital gains tax rates for 2022-23 and 2021-22
If you make a gain after selling a property, you'll pay 18% capital gains tax (CGT) as a basic-rate taxpayer, or 28% if you pay a higher rate of tax. Gains from selling other assets are charged at 10% for basic-rate taxpayers, and 20% for higher-rate taxpayers.
You'll only need to pay these rates on the gains that exceed your capital gains allowance.
CGT allowance for 2022-23 and 2021-22
The capital gains tax allowance in 2022-23 is £12,300, the same as it was in 2021-22.
This is the amount of profit you can make from an asset this tax year before any tax is payable.
If your assets are owned jointly with another person, you can use both of your allowances, which can effectively double the amount you can make before CGT is due.
If you are married or in a civil partnership, you are free to transfer assets to each other without any CGT being charged.
The table below explains your CGT allowance for the tax years 2021-22 and 2022-23.
|CGT allowance for an individual||£12,300||£12,300|
|Couple's allowance (married or in a civil partnership only)||£24,600||£24,600|
However, if you choose to transfer any of your assets to your partner, bear in mind that if you later sell the asset, you'll be charged based on the gain made during the period it was owned by you as a couple, rather than since the asset was passed to your partner.
If you don't make full use of your CGT allowance in a given tax year, you aren't allowed to carry it forward to the next.
- Get a headstart on your 2021-22 tax return with the Which? tax calculator - tot up your bill and submit it directly to HMRC.
When do you need to pay CGT?
You need to have made a certain amount of profit on your items to be taxed on them. This amount depends on whether you're a basic-rate or higher-rate taxpayer, and what the current tax-free allowance is for the tax year.
Typical investments that you might have to pay capital gains on include:
- a second property or buy-to-let
- shares and funds, unless they're held in an Isa or pension
- the sale of a business
- valuable possessions (see more detail below) if they're sold for more than £6,000.
When will you pay CGT on possessions?
Generally, most tangible, movable property sold for more than £6,000 can be taxed under the capital gains rules.
- household furniture
- paintings, antiques, crockery, china and silverware
- lorries and motorbikes
- items of plant and machinery that aren't permanently attached to a building
- fine wine that could be stored for more than 50 years
- collectible sets, such as chessmen, libraries of books or matching ornaments.
Many private possessions are exempt from CGT.
You don't need to pay when you sell a private car, unless you've ever used it for business.
Similarly, wasting assets - which HMRC defines as items with an expected life of 50 years or less - are also exempt from CGT. This includes things like antique clocks, caravans, pleasure boats and most wine if it's not classed as fine wine.
HMRC's standards on whether assets are or aren't wasting assets can be tricky to understand, so if you're selling a valuable asset and aren't sure whether it should be declared for CGT it's a good idea to take expert advice.
How do you calculate your CGT bill?
If your income makes you a basic-rate (20%) taxpayer, but you have made large enough capital gain to push you into a higher-rate tax bracket, you will pay the higher rate of CGT on the amount that takes you over the threshold.
It works like this:
Work out how much taxable income you've earned from your salary, pension or other types of income.
You can do this by deducting your tax-free personal allowance (£12,570 in 2021-22 and 2022-23) from your total income.
Calculate your taxable capital gain by deducting the tax-free CGT allowance (£12,300 in 2021-22 and 2022-2023) from your profits.
You'll only pay CGT on the gain you make from an asset, rather than the sale price.
That means you're allowed to deduct the price you originally paid for it, as well as any additional costs involved with buying and selling it.
You're also allowed to deduct the costs of improving assets, but not the costs of maintaining them (though if you rent them out, maintenance costs may be deductible against any income tax you are charged from the rental income).
Add your taxable capital gain to your taxable income.
For a basic-rate taxpayer, the maximum taxable income you can earn is £37,700 in 2021-22 and 2022-23 before you start paying the higher rate.
With the tax-free personal allowance, most people can earn £50,270 before they start paying the higher rate. Note that some higher earners will start paying the higher rate earlier, as they start to lose their personal allowance if they earn more than £100,000.
And also note that if you receive the marriage allowance, this will increase the amount you can earn tax-free, but you'll still start paying the higher rate at £50,270.
If your taxable income and your taxable capital gain added together is less than £37,700, you’ll pay basic-rate CGT (10% on most investments, 18% on second homes).
If the two figures added together put you in a higher tax threshold, you’ll pay the basic-rate (10% or 18%) on the part up to the threshold, and the higher rate (20% or 28% for second homes) on the rest.
Note that if you're in Scotland, capital gains tax is calculated on the UK thresholds (as above), rather than on the Scottish income tax bands. That raises the possibility that you could be a higher-rate Scottish taxpayer, but still pay the basic rate on capital gains.
How to calculate capital gains tax: an example
This can be complicated to work out, so we'd recommend getting specialist advice, particularly if your circumstances mean a capital gain pushes your income into a higher tax bracket.
But, to provide an explanation of how this kind of tax can work, we've provided a simplified example:
Say your taxable income (that is, what's left after deducting the personal allowance) is £20,000, and your taxable gains are £12,600 - none of which are from property.
After taking away the CGT allowance of £12,300, you're left with £300 that you'll need to pay tax on.
Add this £300 to your taxable income, bringing it up to £20,300. This is still below the higher-rate threshold, meaning you'll pay 10% on the capital gains. Therefore, your CGT bill would be £30.
If you're not sure what your profit is, see our guide on how to calculate your capital gains tax.
Deducting losses from your CGT bill
CGT is charged on your total gains each tax year. So if you make a profit when selling one item, but a loss when selling another, you can deduct the loss from the gain before working out how much tax you owe.
While you can't carry forward any unused allowances, you are allowed to carry forward any losses that haven't been used to offset gains.
Even if you don't owe any CGT, it's important to submit details of losses in your tax return to make it easier to offset them against a potential gain in future years.
When is your payment due?
Payments are due at different times, depending on the asset you've sold.
For properties sold on or after 27 October 2021, CGT bills must be paid within 60 days by submitting a property return directly to HMRC.
For property sales made between 6 April 2020 and 26 October 2021, the window to pay your CGT bill was 30 days.
You can report capital gains to HMRC via the Report Capital Gains Tax online service from the government.
Alternatively, for gains that aren't property-related, you can file a self-assessment tax return.
If you usually fill in a tax return, you must also report any capital gains, regardless of whether you've already used HMRC's online service.
You also need to include how you worked out each capital gain. If you have lost money through an investment (for example, selling a second home at a loss) you should also include details of this on your tax return.
What profits are tax-free?
You don’t have to pay tax on all capital gains. Those listed below are tax-free:
Capital gains tax on cars
- the sale or gifting of private cars - ie not for cars you use for business
Capital gains tax on gifts to spouses or charity
- gifts between husband and wife or registered civil partners, although tax may be due later if the new owner sells the item
- gifts to charities
Capital gains tax on property sales
- the sale of your only or main home
- the sale of a buy-to-let or second home that was your main home within the past 18 months
Find out more in our CGT on property sales guide.
Capital gains tax on personal possessions
- personal possessions (sometimes called personal ‘chattels’) such as antiques, worth no more than £6,000. If you sell a set (of chairs, for example), the £6,000 limit applies to the set, not each item.
- possessions with a useful life of 50 years or less (known as 'wasting assets'), for example, a boat.
Capital gains tax (CGT) on financial products
- betting, pools and lottery winnings
- Isas or Peps
- UK government gilts and premium bonds
- National Savings & Investments products pensions and child trust funds
- proceeds from life insurance policies, unless bought second-hand
- most corporate and local authority bonds you’ve owned directly (rather than holding them in an investment fund)
- building society permanent interest-bearing shares (Pibs) and Sharia-compliant equivalents
- shares while held in approved share incentive plans through your employment
- some schemes to encourage investment in new and growing businesses
Capital gains tax (CGT) and inheritance
- whatever you leave on death (though inheritance tax may be payable instead).
Six ways to cut your CGT bill
If you'd like to minimise the amount of CGT you need to pay, you may consider the following tips.
1. Transfer assets to joint names
Consider transferring assets into joint names if you're married or in a civil partnership. By transferring an asset into joint ownership, you can both make use of your tax-free allowance so that up to £24,600 of any gain is tax-free in 2022-23. But the transfer to your spouse or partner must be a genuine outright gift.
2. Invest in pieces that aren't sets
Investing in paintings, antiques and other collectables can be tax-efficient, especially where they are not treated as a set and so can be sold piece by piece, with each item qualifying for the £6,000 exemption.
3. Consider the 5/3rds option
If your gain after selling possessions is between £6,000 and £15,000, you can either pay tax on the actual gain, or for 5/3rds of what you sold it for, minus £6,000. You can choose whichever figure is lower.
Say you bought a painting for £5,000 and later came to sell it for £7,000.
You can either use the £2,000 gain to calculate the CGT you owe - depending on any other gains you've made, this could be covered by the CGT allowance, or some or all of it may be charged at 10% or 20%. The most you'd pay is £400, which is 20% of the entire gain.
Alternatively, you can opt to pay CGT on 5/3rds of the selling price, minus £6,000. You can find this out by multiplying the selling price by 1.667 to give £11,669, and then taking away £6,000 to leave £5,669. In this case, you'd be better off opting for the standard way of working out a gain.
4. Choose different main homes if you're unmarried
Unmarried partners can each nominate a different property as their main home. You can then benefit from tax relief on both. Married couples and civil partners must choose just one, however.
5. Live in your property
If possible, live in a property before letting it out. If the property is your main home for a time period before you sell it, you can potentially reduce the CGT bill when you eventually sell it. See our guide to capital gains tax and property.
6. Sell shares within your CGT allowance
If you immediately sell employee shares that you get through a save-as-you-earn (SAYE) share option scheme, company share option scheme or enterprise management incentive scheme, you may have a CGT bill. Instead, consider selling in several tranches so that each year’s gain is within your annual tax-free allowance.
If you get shares through a SAYE share option scheme or a share incentive plan, you have 90 days to transfer them tax-free to an Isa or pension. Gains when you eventually sell will then be tax-free.