Chargeable Gains in 2025: How to Avoid Costly Mistakes

When it comes to tax planning, income, dividends, and pensions often take centre stage. But chargeable gains can have just as much impact on your final tax bill—especially if you own property, shares, or business assets.

In 2025, with ongoing changes to allowances and thresholds, it’s more important than ever to understand what chargeable gains are, how they’re taxed, and how to manage them effectively. In this insight, we’ll explain the rules, outline what qualifies, and show you how to make the most of this often-overlooked area of UK tax law.

Chargeable Gain vs Capital Gain

The term capital gain is commonly used, especially for individuals, but the official term used by HMRC is chargeable gain—once all the adjustments have been made.

For example:

• You sell a commercial property for £300,000
• You originally bought it for £200,000
• After deducting legal fees and allowable costs, your capital gain is £95,000
• After applying the annual CGT exemption and any reliefs, your chargeable gain is £70,000

That’s the figure HMRC will tax.

For Companies

Limited companies do not pay Capital Gains Tax. Instead, they pay Corporation Tax on their chargeable gains, which are calculated in a broadly similar way. These gains arise when a company disposes of assets—such as land, property, shares, or equipment—at a profit.

Although the tax is applied through Corporation Tax rather than CGT, companies must still identify and report chargeable gains and apply the correct rules, including restrictions on indexation relief and specific accounting treatments.

What Assets Are Subject to Chargeable Gains?

Not every asset you sell or dispose of will trigger a chargeable gain—but many do. Whether you’re an individual investor, landlord, or company director, it’s important to understand which disposals could land you with a tax bill.

Here are the most common asset types that may give rise to chargeable gains:

Property

• Second homes and buy-to-lets: If you sell a residential property that isn’t your main home, any gain may be subject to Capital Gains Tax (CGT).
  
  
• Commercial property: Whether owned by an individual or a company, gains from the sale of offices, shops, or warehouses are generally chargeable.

Private Residence Relief may exempt your main home—but there are limits if it’s been let out, used for business, or not your primary residence for the entire ownership period.

Shares and Investments

• Shares held outside of tax wrappers like ISAs or pensions
• Units in investment trusts or OEICs
• Cryptocurrency and digital assets (yes, HMRC treats these as assets)

Business Assets

• Interests in partnerships
• Shares in your own company (especially relevant when selling or winding down a business)
• Goodwill or intellectual property

Other Personal Possessions (Chattels)

• Valuable personal items worth more than £6,000, such as antiques, jewellery, art, or classic cars

Disposals under £6,000 in value may fall under special “chattel” rules, and not all will result in a chargeable gain.

How Are Chargeable Gains Calculated?

Calculating a chargeable gain isn’t as simple as subtracting your purchase price from your sale price. HMRC allows for certain deductions and reliefs, which means the gain you’re taxed on could be significantly lower than the headline profit.

Here’s a step-by-step breakdown:

1. Work Out the Disposal Proceeds

This is usually the amount you received when you sold the asset. If you gave it away or sold it at undervalue (such as to a family member), HMRC may instead use the asset’s market value at the date of disposal.

2. Deduct the Original Cost (or Acquisition Value)

This includes:

• The purchase price
• Professional fees such as legal or surveyor costs
• Stamp Duty Land Tax (SDLT) if applicable

If the asset was inherited or gifted, you’ll use the market value at the time of acquisition instead.

3. Deduct Allowable Costs

These are expenses you incurred enhancing or maintaining the asset’s value, such as:

• Renovation or improvement costs
• Capitalised legal or planning fees
• Selling expenses (e.g. estate agent or legal fees)

Routine maintenance or repair costs are not deductible.

4. Apply Any Relevant Reliefs or Exemptions

Depending on your situation, you may be eligible for reliefs such as:

• Business Asset Disposal Relief (BADR) – formerly Entrepreneurs’ Relief
• Private Residence Relief (for main homes)
• Rollover Relief (if reinvesting proceeds into similar assets)
• Annual Exempt Amount for individuals is £3,000 as of 2025. For most trustees, the exempt amount is £1,500.

5. The Result = Chargeable Gain

After all these deductions and reliefs, the amount that remains is your chargeable gain—and this is what’s taxed.

How Are Chargeable Gains Taxed?

Once you’ve calculated your chargeable gain, the next step is understanding how much tax you’ll actually owe. The rate depends on whether you’re an individual or a company—and what type of asset you’ve sold.

For UK residential property disposals, individuals must report and pay any Capital Gains Tax within 60 days of completion. This rule applies even if you’re using a self-assessment return later in the year.

If you’re a non-UK resident, you’re still subject to CGT when disposing of UK property or land. You must report and pay any tax due within 60 days of the sale, regardless of whether there’s a gain.

For Individuals

If you’re a UK resident individual, you’ll pay Capital Gains Tax (CGT) on your chargeable gains after using up your annual CGT exemption.

CGT Allowance (2025)

As of the 2025/26 tax year, the Annual Exempt Amount for individuals is £3,000. This means you only pay CGT on gains above that threshold.

CGT Rates (2025)

As of April 2025, the CGT rate is 18% for basic rate taxpayers and 24% for higher or additional rate taxpayers, regardless of asset type. The distinction between residential property and other assets has been removed.

You’ll be classed as a higher-rate taxpayer if your total taxable income plus your chargeable gains (after deductions) pushes you into the higher-rate band.

For Companies

Companies don’t pay CGT. Instead, chargeable gains are taxed as part of their Corporation Tax calculation.

Key points:

• Companies can deduct indexation allowance only up to December 2017, and only for assets acquired before 1 January 2018. Indexation is frozen for disposals from 1 January 2018 onwards.
• No annual CGT exemption for companies
• Chargeable gains are added to a company’s profits and taxed under Corporation Tax rules. From April 2025, companies with profits over £250,000 pay 25%, those with £50,000 or less pay 19%, and marginal relief applies in between.

Additional Considerations

• You may be able to carry forward capital losses to offset against future gains
• If you live overseas, non-resident CGT rules may apply, particularly for UK property

Common Mistakes to Avoid with Chargeable Gains

Chargeable gains can be a valuable area of tax efficiency—but they’re also easy to get wrong. Here are the most common mistakes we see business owners, investors, and individuals make when it comes to dealing with gains on assets.

❌ 1. Forgetting to Report a Gain

Even if you didn’t receive cash—such as gifting a property to a relative—you may still need to report a disposal and pay tax. Gifting doesn’t exempt you from CGT.

❌ 2. Missing the Annual Exemption Deadline

Your £3,000 CGT allowance is use-it-or-lose-it each tax year. If you don’t time disposals effectively, you could waste your exemption and pay tax unnecessarily.

If possible, consider spreading disposals across two tax years to maximise your exemptions.

❌ 3. Overlooking Allowable Costs and Reliefs

Many taxpayers overpay simply because they forget:

• Acquisition-related legal or valuation fees
• Enhancement costs like major renovations
• Reliefs such as Business Asset Disposal Relief (BADR)

If these aren’t properly recorded and claimed, you’re missing out on legitimate savings.

❌ 4. Failing to Plan Ahead for Business or Property Sales

Whether you’re exiting a company or selling a second property, waiting until the deal is done is often too late. Some reliefs require advance structuring or minimum ownership periods—so early advice is key.

❌ 5. Assuming Your Accountant Will Automatically Handle It

Generalist accountants may not always review your asset disposals in enough depth. Without detailed records or proactive tax planning, key reliefs can be overlooked.

Strategies to Reduce Chargeable Gains

While you can’t avoid tax on legitimate gains, there are several tried-and-tested strategies to reduce the amount you pay—legally and effectively. Many of these rely on timing, structure, and good record-keeping, so it pays to plan ahead.

1. Use the Annual CGT Exemption

For individuals, the first £3,000 of gains in the 2025/26 tax year is tax-free. If you’re planning multiple disposals, you might consider:

• Spreading disposals across tax years
• Making disposals in a lower-income year to benefit from lower CGT rates

Couples can double this exemption by arranging disposals between spouses or civil partners—up to £6,000 tax-free.

2. Claim Private Residence Relief (If Eligible)

If you’re selling a property that’s been your main home, you may be entitled to full or partial Private Residence Relief, reducing or eliminating CGT. You must have lived in the property as your main home for the relief to apply.

3. Apply Business Asset Disposal Relief (BADR)

If you’re selling a business, shares in your personal company, or certain business assets, you may qualify for BADR—reducing CGT to 14% on the first £1 million of qualifying gains, as of April 2025. But you must meet strict conditions, including:

• Holding the assets for at least 2 years
• Owning at least 5% of the business (for shares)

BADR is not automatic—you must claim it on your tax return.

4. Use Rollover Relief for Business Reinvestment

If you sell a business asset and reinvest the proceeds into another qualifying business asset within a set timeframe, you can defer the gain using Rollover Relief.

This is especially useful for those reinvesting in trading premises, plant and machinery, or land.

5. Offset Capital Losses

If you’ve made a loss on other assets—now or in previous years—you can offset those losses against your current gains to reduce the chargeable amount. Be sure to record losses correctly and claim them on your return.

These strategies can make a meaningful difference to your final tax bill—but only if you know they exist and apply them correctly. That’s where tailored advice can be invaluable.

How Nichols & Co. Can Help

Whether you’re selling an investment property, winding down a business, or restructuring your portfolio, understanding chargeable gains can make a significant difference to your tax outcome. With the right planning, you can minimise liabilities, claim valuable reliefs, and avoid costly mistakes.

Need help reviewing a planned disposal or rethinking your tax position more strategically? At Nichols & Co., we provide tailored advice that’s clear, practical, and jargon-free—so you can make confident, tax-efficient decisions. Get in touch today for expert, no-fuss advice.