Guide - How to pay and file CGT

Capital Gains tax (CGT) applies to gains made on the disposal of an asset.

How you pay and file Capital Gains Tax information will depend on the asset you’ve sold. The rules are different if you sell UK residential property, compared to selling other assets.

In this blog, we’ll give you more information about Capital Gains Tax and how to report and pay CGT.

What is capital gains tax?

Capital Gains Tax (CGT) is a tax in the UK that you pay on any profit you make when you come to dispose of or sell an asset that has increased in value. For example, if you’ve made a profit or ’gain’ on the sale of the asset, such as a second property. You’ll need to pay Capital Gains Tax where the overall gain for the year exceeds the annual exempt allowance (see below).

Disposing of an asset

Disposing of an asset includes:

• Selling it

• Giving it away as a gift or transferring it to someone else

• Swapping it for something else

• Getting compensation for it - like an insurance payout if it’s been lost or destroyed

What do I pay capital gains tax on?

Capital gains tax will be due when you sell of dispose of the following:

• Most personal possessions worth £3,000 or more, apart from your car

• Residential property sales that are not your main home

• Your main home if you’ve let it out, used it for business or it’s very large

• Any shares that are not in an ISA or PEP

• Business assets

These are known as ‘chargeable assets’.

If you sell or give away cryptoassets (like cryptocurrency or bitcoin) you should check if you have to pay Capital Gains Tax.

Capital gains tax rates

Capital Gains Tax rates vary depending on if you are a basic rate, higher or additional rate taxpayer in the UK.

Higher or additional rate taxpayers

Gains from 6 April 2025 onwards

The rates for a higher or additional rate taxpayer are:

• 24% on your gains from residential property

• 20% on your gains from other chargeable assets

• 32% on your gains from ‘carried interest’ if you manage an investment fund

Basic rate taxpayers

Gains from 6 April 2025 onwards

You’ll pay:

• 18% on your gains from residential property

• 32% on your gains from‘carried interest’ if you manage an investment fund

• 18% on your gains from other chargeable assets

For basic rate taxpayers, the rate you pay will vary depending on the size of your gain, your taxable income and whether your gain is from residential property or other assets.

Calculating CGT for basic rate taxpayers

1. Firstly, work out how much taxable income you have for the tax year (the tax year is 6 April to 5 April the following year). This is your income minus your Personal Allowance and any other Income Tax reliefs you’re entitled to.

2. Work out your total taxable gains.

3. Deduct your tax-free allowance from your total taxable gains.

4. Add this amount to your taxable income.

5. If the total amount is within the basic Income Tax band, you’ll pay 10% on your gains (or 18% on residential property). You’ll pay 20% (or 28% on residential property) on any amount above the basic tax rate.

Business Asset Disposal Relief (BADR)

BADR is a Capital Gains Tax Relief applied to the sale of a trading business as a sole trader or partnership, or to the sale of shares in a trading company.

Business Asset Disposal Relief means you’ll pay tax at 14% on all gains on qualifying assets disposed of from 6 April 2025. Note: This will increase to 18% for disposals on or after 6 April 2026.

When do you not have to pay capital gains tax?

Capital Gains Tax is only payable on total gains above the annual tax-free allowance (the annual exempt amount). The tax-free allowance for individuals is £3,000.

For trustees, the annual exempt amount is £1,500 (This was £3,000 up until 5 April 2024).

This exemption cannot be carried forward to future years, however, you can crystallise gains each year to the extent of the annual allowance.

How do I report and pay CGT?

The CGT reporting process will depend on the type of asset sold. It will differ if you’ve sold:

• A UK residential property on or after 6 April 2020

• Something else that’s increased in value

In order to report any gains you’ve made you’ll need:

• Details of how much you bought and sold the asset for

• The dates when you took ownership and disposed of the asset

• Other relevant details, such as the costs of buying, selling or making improvements to the asset and tax reliefs you’re entitled to

• Calculations for each capital gain or loss you report

If you don’t get a Capital Gains Tax bill, then you’ll be required to work out your total gains that are above the tax-free allowance and report these yourself.

Reporting can be done via the HMRC website or on Form SA108.

Reporting and paying capital gains tax owed on UK property sales

CGT property disposals need to be reported. You should report residential property disposals (if the property is not your main home or you’ve let out your main home, used it for business, or it’s very large.

If your property was jointly owned

If the property you dispose of was jointly owned, you must report your own gain or loss. Special rules apply if you gift a UK property to your spouse, your civil partner, or charity. Check the HMRC website for more details.

Report and pay online

For a property transaction, you’ll need to use a Capital Gains Tax on UK property account to:

• Report and pay any tax due on UK property

• View or change a previous return

You need to sign in to report and pay online. You can create an account when you sign in for the first time if you don’t already have an account.

For individuals already registered for Self-Assessment, you’ll need to include details of the property disposal in your Self-Assessment tax return.

What information do I need to report a capital gain online?

You’ll need the following information when reporting a residential property disposal that is subject to CGT:

• Address and postcode of the property

• Date you acquire the property

• Date you exchanged contracts when you were selling (or ‘disposing’ of) the property

• Date you stopped being the property’s owner (completion date)

• Value of the property when you got it

• Value of the property when you sold or disposed of it

• Costs of buying, selling or making improvements to the property

• Details of any tax reliefs, allowances or exemptions you’re entitled to claim

• Property type, if you’re not a resident of the UK

• Government gateway account credentials

If you cannot use the online service property account

You’ll need to complete an online form, print and send it to HMRC.

You will then be sent a 14-character Capital Gains payment reference number that starts with an ’X’. You’ll need to quote this payment reference number to pay what you owe by the deadline.

Non-UK residents

Non-UK resident taxpayers are required to report all sales and disposals of UK property or land by the deadline, even if they have no tax to pay.

Reporting on behalf of someone else or an estate

To report for someone else, you can still use your own Capital Gains Tax on UK property account.

Proof will be required to prove that you’re allowed to report on their behalf. This could be a lasting power of attorney. For individuals who have died, you’ll need their date of death.

You cannot pay using your own account if you’re a personal representative reporting a gain on behalf of an estate (executor or administrator).

Agent services account

If you’re an agent, you’ll need to check that your client has set up their own account and you’ll need to set up an agent services account. You should ask your client to give you their UK account number, UK postcode, or country of residence as part of the agent client authorisation process. The agent requests access, and your client will need to authorise you to manage their account.

Reporting on behalf of a trust

When reporting as a trustee of a registered trust, you’ll need the trust’s registration number or unique tax reference.

When reporting as a corporate trustee, you’ll need to complete an online form, then print and send it to HMRC.

If you’re a non-resident trustee of a trust

You’ll need to complete an online form, then print and send it to HMRC if the trust both:

• Does not need to register with HMRC

• Has no Capital Gains Tax to pay

View and change a previous CGT return for property gains

You can use your UK property account to view and alter previous returns.

Complete an online form, print and send it to HMRC to change a return you made for someone else.

You cannot change a return for the 2022 to 2023 tax year or earlier, or if you have already sent a Self Assessment return for the same tax year as the Capital Gains Tax on UK property return.

Reporting other capital gains

If you have disposed of other assets and have gains to report, you can report the gain in the tax year after you sold or disposed of an asset. This can be done via a Self-Assessment income tax return, or you may be able to use the ‘real time’ Capital Gains Tax service to report by 31 December in the tax year after the sale.

Paying CGT due

The following methods can make payment of CGT for your capital gain:

• Approving a payment through your online bank account

• Online or telephone banking

• Debit or credit card

• Cheque

Reporting capital gains and losses on your Self-Assessment tax return

You can report your gains on other assets (excluding property) in the tax year after you’ve sold an asset in your Self-Assessment tax return.

Once you’ve submitted your Self-Assessment tax return, HMRC will tell you how much CGT you owe, how to pay and when to pay the CGT you owe.

Use the SA108 supplementary pages when filing your SA100 Self-Assessment returns to record capital gains and losses.

SA108 form: how to use it to file your Capital Gains Tax

The SA108 form is a supplementary section to a paper Self-Assessment tax return. The SA108 form is used to declare profit on the disposal of an asset while filing a paper Self-Assessment tax return.

Note: This form is only for paper tax returns.

Do I need to use the SAT108 form if I submit my Self-Assessment tax return online?

No, you will not be required to submit a SA108 form if you file your Self-Assessment tax return online. However, you are still required to declare your profit or gain from the sale of assets if you file your tax return online.

How dns accountants can help

Our tax advisors have a vast knowledge of tax obligations, tax legislation, tax returns and capital gains tax. Contact us today if you require more help and advice on a capital gain, selling UK residential property, setting up a property account, submitting your Self-Assessment return, your CGT and income tax liability, how to pay CGT, UK property tax, how to pay online, reporting chargeable gains, how to report property disposals or any other wider tax affairs or tax planning advice. Contact dns on 03300 886 686 or email us on [email protected].

About the author

Gary Zouvani
I am a qualified chartered management accountant with over 25 years’ experience working in industry and accountancy practise. Currently DNS group operations director I manage over 50 employees as well as head up our accountancy franchise proposition.