Capital gains tax receipts reached a record £24.2 billion in the 2024-25 tax year, an 89% jump on the previous year, as rate rises and a rush of pre-budget asset sales swelled the number of people paying the tax to an all-time high of 584,000. The capital gains tax receipts record, confirmed by HM Revenue & Customs (HMRC), marks a 45% increase in the taxpayer count, equivalent to an extra 181,000 people entering the system.
What is capital gains tax and why did receipts surge?
Capital gains tax (CGT) is charged on the profit made when you sell or dispose of an asset, such as a business, an investment, or a property. You pay tax on the gain you made, not the full sale price.
The Labour Government announced changes to CGT in its first autumn budget in 2024. The main rates rose from 10% to 18% for basic-rate taxpayers, and from 20% to 24% for higher-rate taxpayers, on disposals made after October 2024. But the rate rises were not the only driver of the surge. Public speculation ahead of the budget prompted many people to sell assets early, hoping to lock in the lower rates before the anticipated increase. Cuts to annual tax-free allowances in previous years also broadened the pool of people liable to pay, HMRC said.
Sean Cockburn, private client partner at Forvis Mazars, put it plainly: ‘The spike is driven by a number of factors. Cuts to annual exemptions have widened the net at the same time as increases to headline rates, while investors, landlords, and businesses have been accelerating asset disposals, both by choice and out of necessity.’
Cockburn added that ‘CGT remains firmly in the spotlight ahead for the Autumn Budget, with potential changes on the Treasury’s list.’
How much will the rate rises raise going forward?
The full financial effect of the rate increases is still working through the system. According to the UK Parliament Commons Library, the increases in the main rates of CGT, together with the two-stage increase in the rate for Business Asset Disposal Relief and Investors’ Relief, are forecast to raise £90 million in 2024/25, rising to £1.44 billion in 2025/26. That projection suggests the 2024/25 receipts record was driven largely by the behavioural response to anticipated changes, with the full structural effect of higher rates still to come.
Business Asset Disposal Relief (BADR) is a tax relief that reduces the CGT rate for qualifying business sales. According to Scottish Financial News, 8% of all CGT collected during the year came from sales that qualified for BADR, underlining how much of the tax base still involves business disposals even amid the wider surge in property and investment sales.
A tax paid by very few, concentrated in London and the south-east
Despite the headline figures, CGT remains something paid by a small fraction of the population. A Treasury spokesman said that ‘around 1% of Brits pay the tax each year.’ And within that group, the receipts are concentrated heavily at the top: 45% of total CGT collected came from taxpayers who made gains of £5 million or more, a group that represents less than 1% of all capital gains taxpayers.
Geographically, taxpayers in London and the south-east of England accounted for half of the total amount paid.
Crypto gains: 240 millionaires and a largely male investor base
The HMRC data also contained the first published breakdown of capital gains from cryptocurrency, covering assets such as Bitcoin, Ethereum and Dogecoin. There were 17,600 individuals with crypto disposals liable for CGT in 2024-25, generating total gains of £1.38 billion. Of those, 240 were cryptocurrency millionaires in terms of their gains.
The gender split was stark: 87% of crypto CGT taxpayers were men, with women making up around 13%.
The Treasury said revenues go towards its priorities of ‘giving families and businesses a bit of breathing space, backing British jobs, and driving growth in every postcode.’ With the Commons Library projecting CGT receipts to climb further as the full rate increases take effect in 2025/26, the tax is unlikely to leave the headlines any time soon.
