Capital gains tax: more people have to pay, so here’s what you need to know

The rules have changed and more taxpayers are being pulled into the net, not only the wealthy

L ess generous rules have turned capital gains tax into a “cash machine” for the government, with income from the levy soaring by almost 80% to £24bn in the last tax year – equivalent to well over £800 a household.

A series of changes to the way the charge works means more people are being pulled into the capital gains tax (CGT) net, and not only the wealthy. And, given the scale of the change, this week experts were reminding consumers of legitimate ways to reduce a CGT bill.

CGT is a tax on the profit you make when you sell – or “dispose of” – something that has increased in value. It is proving to be “a decent cash machine for the taxman”, says Clare Stinton, the senior personal finance analyst at the investment platform Hargreaves Lansdown.

The £24.3bn raised in 2025-26 is up sharply on the previous year’s £13.7bn haul, and more than three times the amount raised in 2017-18. The government’s economics watchdog, the Office for Budget Responsibility, recently predicted that the amount CGT pulls in is likely to keep rising and will hit £35bn in 2030-31.

Meanwhile, last month the former health secretary Wes Streeting set out plans for a wealth tax that would equalise CGT with income tax, which he said would make the system fairer and mean higher bills for many of those affected.

CGT is levied on profits from a variety of assets, most notably investments (funds and shares) that are not held in an Isa, property that is not your main home, and most personal possessions worth £6,000 or more, apart from your car.

You get a tax-free allowance for each tax year, known as the annual exempt amount. However, this has been slashed in recent years: until 2022-23 it was £12,300, then it was cut to £6,000, and now it is £3,000.