Capital Gains Tax Explained: Do You Need to Report it on Self Assessment?

Capital Gains Tax (CGT) is a tax on the profit you make when you sell or dispose of certain assets. This can include property, shares, cryptocurrencies, and valuable personal items. While not all gains are taxable, HMRC has strict reporting requirements, so understanding CGT is essential to avoid fines and pay only what’s due.

Which Assets Are Covered?

CGT applies to a wide range of assets, including:

• Residential or commercial property (excluding your primary residence)

• Shares, stocks, and investment funds

• Cryptocurrencies (Bitcoin, Ethereum, etc.)

• Other valuable assets such as art, antiques, and jewellery
  

Annual Exempt Allowance

Each individual is entitled to an annual CGT allowance. For the 2024/25 tax year, this is:

• £3,000 per person

• Only gains above this threshold are taxable

Example: If you sold shares with a gain of £2,500, you wouldn’t pay CGT. If the gain was £4,500, only £1,500 would be taxable.

When You Must Report CGT

You need to report CGT on your Self Assessment if:

• Your total gains in the tax year exceed the annual exempt allowance

• You sold residential property (even if your gain is below the allowance)

HMRC requires accurate reporting, and failing to do so can lead to penalties and interest on unpaid tax.

Ways to Reduce Your CGT Liability

You may be able to reduce the amount of CGT payable by:

• Offsetting capital losses from other asset sales

• Claiming available reliefs, such as:

  • Entrepreneur’s Relief (now Business Asset Disposal Relief)

  • Investors’ Relief

• Timing asset disposals strategically across tax years

Conclusion

Understanding Capital Gains Tax and correctly reporting it on Self Assessment is crucial. By knowing which assets are taxable, keeping accurate records, and claiming reliefs where possible, you ensure compliance with HMRC and only pay what you legally owe.