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

Capital gains tax receipts surged almost 80% to £24bn in the 2025-26 tax year, equivalent to more than £800 per household, as reduced allowances and higher rates pulled more taxpayers into the net, according to analysis from Hargreaves Lansdown [1]. The £24.3bn raised is up sharply from £13.7bn the previous year and more than three times the amount collected in 2017-18 [1]. The Office for Budget Responsibility projects the levy will reach £35bn by 2030-31 [1]. Clare Stinton, senior personal finance analyst at Hargreaves Lansdown, described the tax as "a decent cash machine for the taxman" [1]. The expansion follows a series of policy changes. The annual exempt amount, which stood at £12,300 until 2022-23, was cut to £6,000 and now sits at £3,000 [1]. In the October 2024 budget, the higher rate rose to 24% on gains, while basic-rate taxpayers pay 18% or less depending on the size of the gain and their taxable income [1]. Tax experts outlined several legal strategies to reduce liability. Elsa Littlewood, a tax partner at BDO, noted that a family of four can shelter up to £58,000 annually using adult and junior Isa allowances [1]. Investors holding assets outside an Isa can offset losses against taxable gains, either in the current year or carried forward via a tax return. "Matching gains and losses can cut the overall tax bill," Littlewood said [1]. Clare Moffat, a pensions and tax expert at Royal London, said reducing taxable income through pension contributions or charitable donations can lower the rate applied to gains. For someone pushed into the higher-rate band by a disposal, "making a pension contribution for the amount you are over could mean you pay 18% CGT rather than 24%," Moffat said [1]. Internationally, capital gains are typically taxed at lower rates than wages. In the United States, for example, capital gains are currently taxable at a lower rate than wages, and capital losses reduce taxable income to the extent of gains [2]. The debate over taxing wealth versus income has also intensified. As of 2017, only five of 36 OECD countries maintained a personal wealth tax, down from 12 in 1990 [3]. Proponents argue such taxes can reduce income inequality by making it harder to accumulate large holdings, though implementation remains limited [3]. Last month, former health secretary Wes Streeting proposed equalising CGT with income tax as part of a broader wealth tax plan, arguing it would make the system fairer while raising bills for many affected [1]. The OBR's forecast suggests the current trajectory will continue to lift receipts even without further rate alignment [1].