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If you’re a property investor, business owner, crypto trader, or high-net-worth individual, understanding the current rules and upcoming policy changes is essential for managing your tax liabilities efficiently. Let’s break down everything you need to know for 2025 and explore what HMRC and the government have in store over the next three years.
What Is Capital Gains Tax?
Capital Gains Tax is charged on the profit made when you dispose of an asset. Disposal doesn’t just mean selling—it includes gifts, exchanges, and transfers. CGT applies to a wide range of assets such as:
- Buy-to-let or second properties
- Company shares
- Business assets
- Art, jewellery, and collectables
- Cryptocurrency
You’re taxed only on the gain, not the total amount received. Certain reliefs and allowances apply, but the rules are getting stricter year by year.
Capital Gains Tax in 2025: The Key Numbers
Annual Exempt Amount
For the 2025/26 tax year, the Annual Exempt Amount is just £3,000 per individual. This is a sharp drop from the previous £12,300 a few years ago and has a major impact on smaller investors who previously paid no CGT.
Trusts are even more limited, with a £1,500 exemption.
Tax Rates
Capital Gains Tax rates now vary based on your income tax band and the asset type:
- Basic rate taxpayers: 18%
- Higher and additional rate taxpayers: 24%
These rates apply to gains on most assets, including shares and business assets. Residential property gains remain at the same 18% and 24% rates, depending on your income band.
Reporting Rules
- UK residential property disposals must be reported within 60 days of the sale.
- Other capital gains must be reported via the Self Assessment tax return if the gain exceeds £3,000 or if the total disposal proceeds are over £50,000.
- Cryptoassets and foreign assets are under increasing scrutiny, requiring accurate and timely reporting.
What’s Changing in 2025
Increased Tax on Business Sales: If you’re planning to sell a business or dispose of shares, you may have previously relied on Business Asset Disposal Relief (BADR) or Investors’ Relief, which offered a flat 10% rate on qualifying gains. That’s now changing:
- The rate increases to 14% from April 2025.
- It will rise again to 18% from April 2026.
- The lifetime limit for Investors’ Relief has been reduced to £1 million.
Planning the timing of your business disposal is now more important than ever.
Carried Interest Flat Rate: Carried interest—common among investment fund managers—is now taxed at a flat 32% from April 2025, replacing the previous lower CGT rates. This is a targeted effort to increase taxation on private equity profits.
Crypto Asset Crackdown: From January 2026, HMRC will implement new reporting frameworks for cryptoassets. If you’ve been trading or investing in digital currencies, prepare for detailed disclosures and a higher risk of audits and penalties.
What to Expect by 2028: The Government’s Direction
Potential Alignment with Income Tax: There is ongoing political and economic pressure to align CGT rates with income tax. This could mean CGT rising to as high as 40–45% for high earners. The aim? Close the perceived gap between capital income and earned income.
Further Reductions in Allowances: The CGT exemption has been cut aggressively. If the trend continues, the allowance could be eliminated entirely or reduced to a symbolic amount—perhaps under £1,000 annually.
Wealth Tax Proposals: Government think tanks and fiscal experts are actively discussing a wealth tax for ultra-high-net-worth individuals. One model includes a 2% annual levy on assets over £10 million. Although not yet an official policy, it’s gaining traction as the government seeks new revenue sources.
Expanded Reporting Requirements: By 2026 and beyond, expect:
- Tighter enforcement for foreign income and gains
- Cryptoassets are fully integrated into tax systems
- Automatic data sharing between financial institutions and HMRC
The days of under-the-radar investing are over.
Strategic Tax Planning Tips for 2025 and Beyond
Here’s how to stay ahead of the curve:
- Use Your Allowance Before It Shrinks Again: Even at £3,000, your Annual Exempt Amount is a valuable resource. Consider disposing of low-gain assets to use the allowance annually.
- Offset Gains with Losses: Review your portfolio. If you’ve made gains on some assets and losses on others, selling both in the same tax year can offset and reduce your CGT bill.
- Spread Gains Between Spouses: Transfers between spouses are tax-free. By moving assets to a lower-earning spouse, you may use their £3,000 allowance and keep gains in the basic tax band.
- Hold Investments in Tax-Efficient Wrappers: ISAs and pensions remain free from CGT. Maximise your annual ISA contribution and review pension contributions as a way to shelter capital growth.
- Time Your Disposals Carefully: With rate changes scheduled in April 2025 and 2026, it may be wise to bring forward a disposal or delay it, depending on your situation. Timing is key.
Capital Gains Tax Is Getting Tougher
The UK’s Capital Gains Tax regime is tightening year by year. With higher rates, lower allowances, and more complex reporting, it’s no longer a tax you can afford to overlook.
From the investor selling off a property to the entrepreneur planning a business exit, CGT is now a frontline issue in financial planning. The earlier you strategise, the more you save.
Do you need tailored advice for your specific situation? Whether you’re considering a sale, planning succession, or need clarity on crypto or foreign assets, professional tax advice can help you stay compliant and optimise outcomes.