The Capital Gains Tax allowance for the 2024/25 tax year stands at £3,000 per individual, representing a significant reduction from the previous annual exemption of £6,000. This threshold applies to all UK taxpayers selling assets or property, meaning more individuals may now face CGT liabilities on their gains.
Understanding these allowances and the applicable rates is essential for anyone disposing of assets, whether shares, property, or business interests. The rules differ substantially depending on income tax band, asset type, and the timing of sales relative to recent Budget changes announced by Chancellor Rachel Reeves in October 2024.
What is the CGT allowance for 2024/25?
The annual CGT allowance for 2024/25 is set at £3,000 per individual, having been reduced by half from the £6,000 exemption that applied in 2023/24. This allowance represents the amount of capital gains you can realise before CGT becomes liable. Spouses and civil partners can each claim their own allowance, allowing married couples or civil partners to potentially shelter up to £6,000 in combined gains from tax.
For trusts, the allowance is £1,500 per trust. The tax year runs from 6 April 2024 to 5 April 2025, with the same £3,000 threshold confirmed for the subsequent 2025/26 tax year.
The 2024/25 CGT landscape centres on four key figures: the £3,000 annual allowance per individual, the 18% basic rate, the 24% higher rate, and the 6 April 2024 to 5 April 2025 tax year boundary. These parameters apply to most asset sales according to official Gov.uk guidance.
Why the reduction matters
The halving of the annual exemption from £6,000 to £3,000 means that threshold-free selling strategies that previously worked may no longer be viable. Taxpayers who routinely realising modest gains just within the old £6,000 limit may now find themselves liable for CGT on the entire gain above the lower threshold. This change affects both casual investors selling shares and property owners who have seen significant appreciation in asset values.
- The allowance is frozen at £3,000 through at least 2025/26
- Each spouse or civil partner qualifies for the full £3,000 exemption
- The reduction brings more taxpayers into CGT liability
- Trusts receive a reduced allowance of £1,500
- Unused allowance cannot be carried forward to future years
- The allowance applies after other reliefs have been considered
| Parameter | 2024/25 Value | Source |
|---|---|---|
| Annual individual allowance | £3,000 | Moore South |
| Spouse/civil partner combined | £6,000 | Moore South |
| Trust allowance | £1,500 | Ross Martin |
| Basic rate band | 18% | Gov.uk |
| Higher rate band | 24% | Gov.uk |
| Carried interest rate | 32% | Gov.uk |
What are the Capital Gains Tax rates for 2024/25?
Capital Gains Tax rates for 2024/25 vary according to your total taxable income and where your gains fall within your income tax bands. The rates increased significantly following the Chancellor’s Autumn Budget announcement on 30 October 2024, with further changes taking effect from 6 April 2025 for certain categories.
Rates by income tax band
For basic rate taxpayers, whose annual income falls at or below the £50,270 threshold, capital gains within the basic rate band are taxed at 18%. Gains that exceed this threshold enter the higher rate band and are taxed at 24%. For higher and additional rate taxpayers, with income above £50,270, most asset gains attract a 24% CGT rate.
When a capital gain straddles the boundary between basic and higher rate bands, it is apportioned proportionally. The portion within the basic rate band is taxed at the lower rate, while any excess is taxed at the higher rate. This banding structure means the same £10,000 gain could face different effective tax rates depending on your total income.
The October 2024 Budget introduced substantial increases to CGT rates. The lower rate rose from 10% to 18%, while the higher rate increased from 20% to 24%. These changes apply to disposals made from 30 October 2024 until 5 April 2025. From 6 April 2025, Business Asset Disposal Relief also increased from 10% to 14%.
Special categories and rates
Residential property sales follow the same general rate structure, with 18% applying to gains within the basic rate band and 24% for gains above it. However, carried interest—the share of investment fund profits paid to managers—continues to attract different treatment, with basic rate taxpayers paying 18% and higher rate taxpayers facing a 32% charge from 6 April 2025 onwards.
Business Asset Disposal Relief, formerly known as Entrepreneurs’ Relief, provides reduced rates for qualifying business disposals. The rate increased from 10% to 14% from 6 April 2025, though it remains significantly lower than standard CGT rates for those who meet the eligibility criteria.
Assets exempt from Capital Gains Tax
Certain assets and transactions fall entirely outside the scope of CGT. Your main home qualifies for Private Residence Relief when you meet the specific conditions regarding ownership and occupation. ISAs and pension funds grow free of CGT, as do National Savings certificates and premium bond winnings. Lottery and gambling winnings are also exempt, along with gifts made to spouses or civil partners, which transfer gains tax-free between eligible couples.
- Your principal residence meeting Private Residence Relief conditions
- Individual Savings Accounts (ISAs) and pension arrangements
- Winnings from lotteries, betting, and gambling
- Gifts between spouses or civil partners
- Government bonds and certain corporate bonds in some cases
- Cash holdings and foreign currency for personal use
How has the CGT allowance changed over recent years?
The CGT annual exemption has undergone significant reductions in recent tax years, with the most dramatic change occurring between 2023/24 and 2024/25. Before these changes, the allowance had been rising steadily, reaching £12,300 in 2020/21 and 2021/22. The trajectory has since reversed sharply, with the exemption now standing at half its previous level.
- 2020/21 and 2021/22: Annual exemption peaked at £12,300 per individual
- 2022/23: Allowance reduced to £12,300 before the freeze began
- 2023/24: First reduction to £6,000 as part of the allowance freeze
- 2024/25: Further reduction to £3,000 per individual
- 2025/26: Allowance remains at £3,000 per individual
- 2026/27: Current indications suggest continuation at £3,000
The October 2024 Budget introduced not only the reduced allowance but also substantial rate increases. The pre-Budget position from 6 April 2024 had seen rates of 10% for basic rate taxpayers and 20% for higher rate taxpayers on non-property assets, with residential property gains attracting 18% and 24% respectively. These rates were substantially increased from 30 October 2024 onwards, with the lower rate doubling from 10% to 18%.
From 6 April 2025, the Business Asset Disposal Relief rate increased from 10% to 14%, and the carried interest rate for higher rate taxpayers rose from 28% to 32%. If you are planning business asset disposals, the timing of such transactions relative to these dates may affect your tax liability significantly.
How do you calculate CGT for the 2024/25 tax year?
Calculating Capital Gains Tax for the 2024/25 tax year involves several steps, beginning with determining your total chargeable gains and then applying the annual exemption before calculating any tax due. The process differs depending on whether you are a basic rate or higher rate taxpayer, and gains may be split across tax bands when determining the applicable rate.
Step-by-step calculation process
First, identify all chargeable assets disposed of during the tax year. Subtract the cost basis and any allowable expenses to arrive at your total gain. Next, deduct the £3,000 annual exemption to find your taxable gain. Then determine which CGT band applies by adding your capital gain to your total income for the year.
For a basic rate taxpayer with a £10,000 gain from selling shares, the calculation proceeds as follows: the first £3,000 is covered by the annual allowance and attracts zero tax, leaving £7,000 subject to CGT. Since this falls within the basic rate band, the 18% rate applies, resulting in a tax liability of £1,260.
A higher rate taxpayer with the same £10,000 gain would calculate differently. Again, £3,000 is tax-free, leaving £7,000 to tax. However, because total income exceeds £50,270, the entire £7,000 is taxed at the 24% higher rate, producing a liability of £1,680.
When gains push your total taxable income above the basic rate threshold, the portion within the basic rate band is taxed at 18% while any excess is taxed at 24%. HMRC guidance confirms that gains are apportioned proportionally between the bands, ensuring a smooth transition rather than a cliff-edge effect where a small additional gain triggers a much higher rate on the entire amount.
Using official calculators and tools
HMRC provides online tools and guidance to help taxpayers estimate their CGT liabilities. The official Gov.uk CGT rates page includes worked examples and deduction steps that can assist with personal calculations. For complex situations involving multiple asset classes, mixed tax band positions, or significant gains, professional advice from a qualified tax advisor remains advisable.
The Low Income Tax Reform Group provides detailed guidance on CGT matters, particularly helpful for those new to capital gains taxation or dealing with non-standard asset types. Their resources explain how CGT interacts with other aspects of the tax system and highlight areas where special rules apply. For those managing multiple financial priorities, understanding how capital gains tax intersects with benefit entitlements can be particularly valuable.
What is confirmed and what remains uncertain about CGT?
| Established information | Uncertain elements |
|---|---|
| £3,000 allowance for 2024/25 | Whether further reductions will occur after 2026/27 |
| Rates of 18% and 24% for individuals | Potential for rate changes in future Budgets |
| £3,000 allowance for 2025/26 | Whether allowance will remain frozen beyond current plans |
| Rate changes effective 30 October 2024 | Specific treatment of any future changes to carried interest |
| Business Asset Disposal Relief at 14% from April 2025 | Long-term trajectory for business relief rates |
The confirmed facts about CGT for 2024/25 are substantial and well-documented. The allowance of £3,000 applies to all individuals for the current tax year and the following year. The rate structure with 18% and 24% for individual taxpayers is fixed and applies through to 5 April 2025. The changes announced on 30 October 2024 are law and apply to all qualifying disposals made from that date.
Areas of uncertainty remain, primarily around future policy directions. While the allowance appears frozen at £3,000 through at least 2026/27 according to current government statements, fiscal events could introduce changes. The Chancellor’s Autumn Budgets traditionally bring fiscal adjustments, and the allowance freeze represents a policy choice that could be extended, modified, or ended depending on broader fiscal priorities.
Where can I find official CGT guidance and resources?
The primary authoritative source for CGT information is HM Revenue and Customs, operating through the Gov.uk website. The official guidance on Capital Gains Tax rates and allowances provides the definitive position on current rates, allowances, and calculation methodologies. This guidance is updated following each Budget and represents the most reliable reference point for tax obligations.
The Low Income Tax Reform Group offers detailed explanatory content that complements official guidance, particularly useful for taxpayers in non-standard situations or those requiring more detailed explanations of how CGT rules apply in practice. Their resources are particularly valuable for understanding the interaction between CGT and other tax provisions.
From 6 April 2024 to 29 October 2024, the Capital Gains Tax rates on non-property assets were 10% for basic rate taxpayers and 20% for higher rate taxpayers. Residential property gains attracted 18% and 24% respectively.
— Gov.uk Capital Gains Tax guidance
Key points about the CGT allowance for 2024/25
The CGT allowance of £3,000 for 2024/25 represents a substantial reduction from the previous £6,000 exemption, meaning more taxpayers now face capital gains tax on asset sales. Combined with the rate increases announced in October 2024, the current tax year presents a significantly altered landscape for anyone disposing of assets. The allowance applies per individual, allowing married couples and civil partners to shelter combined gains of up to £6,000. Rates of 18% and 24% apply to most assets, with special rates for carried interest and business assets. Those with complex tax situations or significant gains should seek professional guidance to ensure compliance and optimise their tax position.
For related financial guidance, see our articles on Budgeting Advance Universal Credit – Eligibility and Application Guide and Weight Loss Injections NHS – Who Qualifies and How to Access.
Frequently Asked Questions
What are the income tax bands for 2024/25?
The basic rate band extends up to £50,270 for the 2024/25 tax year. Income above this threshold falls into the higher rate band, which determines the applicable CGT rate for gains that exceed the basic rate limit.
What is the CGT allowance for 2025/26?
The CGT allowance for 2025/26 remains £3,000 per individual, the same as the current tax year. For trusts, the allowance is £1,500.
Where can I find an official CGT calculator?
HMRC provides guidance and worked examples on the Gov.uk website. Third-party tax calculators are also available, though results should be verified against official guidance.
Do spouses and civil partners each get a CGT allowance?
Yes, each spouse or civil partner qualifies for the full £3,000 annual exemption. This effectively allows a married couple or civil partnership to shelter up to £6,000 in combined gains from CGT.
Has the CGT allowance changed since 2023/24?
The allowance was halved from £6,000 in 2023/24 to £3,000 from 2024/25 onwards. This reduction significantly increased the number of taxpayers liable for CGT.
What CGT rate applies to residential property?
Residential property attracts 18% CGT for basic rate taxpayers on gains within the basic rate band, and 24% for gains above that threshold or for higher rate taxpayers. These rates apply from 30 October 2024 onwards.
When do CGT rates apply from 6 April 2025?
From 6 April 2025, the Business Asset Disposal Relief rate increases from 10% to 14%, and the carried interest rate for higher rate taxpayers rises from 28% to 32%.
Sophie Kendall is Celebrity News Editor at ShowbizUK.co.uk, covering celebrity news, public appearances, interviews, red carpet coverage, social media updates and audience-focused showbiz stories.