(Because your profits shouldn’t surprise you with a tax bill later)
If you’re thinking of selling your crypto, cashing out stocks, or flipping your first investment property — pause for a second. There’s one thing you need to understand first: Capital Gains Tax (aka CGT). It’s one of those grown-up money things that can sneak up on you if you’re not prepared.
🧾 What Is Capital Gains Tax?
Capital Gains Tax (CGT) is a tax you pay on the profit (not the total amount) you make when you sell an asset that’s increased in value.
Let’s say you bought shares for £5,000 and sold them later for £10,000. Your gain is £5,000 — that’s the part that will be taxed.
Assets that CGT applies to include:
- 🏡 Property (not your main home)
- 📈 Stocks and shares
- 💰 Crypto (yes, including Bitcoin)
- 💼 Business assets
- 🎨 Valuables like art, jewelry, or antiques
💷 How Much Is the Capital Gains Tax?
Here’s how it breaks down (as of 2024–25):
- Basic rate taxpayers pay 10% on gains
- Higher rate taxpayers pay 20%
- BUT if you’re selling residential property, the rates are higher:
- 18% (basic rate) and 28% (higher rate)
You only pay CGT on profits above the annual tax-free allowance, which is £3,000 (down from previous years).
🏡 Scottish Indian Selling Property? Here’s the Catch
If you’re selling a second home, buy-to-let, or an inherited property, you will likely owe CGT.
Good news:
- You don’t usually pay CGT on your main residence
- You might be eligible for Private Residence Relief if you lived in it for some time
Not so Good news:
- You must report and pay CGT within 60 days of the sale — or you could face penalties
📊 What About Crypto and Stocks?
Yes — selling crypto counts as a taxable gain if you’ve made profit. Same with stocks and shares, unless they’re held in a tax-free ISA.
💡 If you’re trading or flipping NFTs, crypto, or stocks as a side hustle, keep good records of your buys and sells — HMRC is watching!
🧠 Too Long; Read This:
- Capital Gains Tax = tax on profit when selling valuable stuff
- Applies to property, shares, crypto, art, and more
- You get a £3,000 tax-free allowance (per year)
- Residential property is taxed higher than other assets
- Report property sales within 60 days to HMRC
- Use ISAs or tax planning to keep more of your gains
✅ Final Tip:
If you’re not sure if you owe CGT or how to calculate your gain, speak to the HMRC support or a tax adviser — better safe than sorry! HMRC may also be able to provide an interpreter for you if you need to understand the information in a different language. So unhesitatingly ask if you need to!
