CGT data shows property disposals surge in 24/25 but liabilities fell in 23/24 as investors sat tight

HM Revenue and Customs’ annual update of official Capital Gains Tax (CGT) statistics [1] today revealed that: 

• In the 2023 to 2024 tax year, the total CGT liability was £12.1 billion for 378,000 taxpayers, realised on £65.9 billion of gains. This represents a decrease in gains and liabilities of 19% and 18% respectively. 

• However, the number of CGT taxpayers in the 2023 to 2024 tax year increased by 1% to 378,000. This is explained by the reduction of the Annual Exempt Amount (AEA) from April 2023 which brought up to 87,000 additional taxpayers into the scope of CGT.  

• In the 2024 to 2025 tax year, 163,000 taxpayers filed a CGT on UK Property return, reporting 183,000 disposals and £10.3 billion gains on residential property for a total CGT liability of £2.2 billion. This represents increases from the 2023 to 2024 tax year of 28% for the number of disposals, while gains and liabilities reported through the service have increased by 39% and 33% to £10.3 billion and £2.2 billion respectively. These are the highest figures since the introduction of the CGT on UK Property service in April 2020.

Jason Hollands, Managing Director at leading UK wealth management firm Evelyn Partners, comments: 

‘These statistics reveal two telling points. One is that although 87,000 additional taxpayers were drawn into CGT liabilities in 2023/24 due to the cut in the annual exempt allowance, overall liabilities fell by 18%. Second, there was a big surge in CGT on residential property in 2024/25, with a remarkable 33% increase in liabilities as people with investment or second properties sold up, with a 28% increase in disposals on the previous year. 

'While this data tells us nothing directly about trends for investors realising capital gains under the current Government - as it pre-dates the General Election[2] – it does indicate that the quite drastic cut to the annual exempt allowance from £12,300 in 2022/23 to £6,000 under the previous Conservative administration did not give Treasury coffers the boost that ministers were obviously hoping for. More recent receipts data suggest that the further halving of the exemption in 2024/5 to £3,000 did nothing to improve the CGT take.  

‘This update suggests that while some investors have been deterred from crystallising gains, there was a surge of property owners in 2024/25 disposing of their buy-to-let or second homes, either for fear of further CGT rises or because of conditions in the BTL market, or both. 

‘It remains to be seen what the impact will be from the increases in the rates of CGT in Rachel Reeves’ Budget last year. These rose, with immediate effect on 30 October, from 10% to 18% for basic rate taxpayers and 20% to 24% for those on the higher rates of tax. Given the rife speculation that preceded that Budget of even steeper rises and even a potential alignment with income tax rates, we certainly saw evidence of clients crystallising gains ahead the event. This may well have generated a bump in CGT reliefs in the earlier part of the 2024/25 tax year but the trend thereafter could well be downward as investors and business owners change their behaviour.  

‘Receipts show that CGT brought in £16.93 billion in 2022/23, £14.50 billion in 2023/24 and just £13.06 billion in 2024/25 [2]. This year-by-year slide in CGT receipts has taken place during a period when the annual capital gains exemption was drastically cut, which suggest that investors are changing their behaviour and holding onto or rearranging their assets.  

‘It doesn’t bode well for the Chancellor’s hopes that her CGT rate hikes will bolster the public purse over the coming years.  

‘We learned this week that in the first six months of this year the CGT receipt total was £11.78 billion compared to £13.52 billion in the same period last year. But this most recent monthly receipts data is very partial and will primarily be derived from property sales as these are reportable within 60 days whereas gains on other assets are typically disclosed via annual self-assessment tax returns, so we’ll have to wait until this time next year before we start seeing the effect of the rate hikes and further cut to the annual exemption on the overall CGT take. 

‘Most of the evidence – from recent and more distant history in the UK, and from other countries - does not support the idea that taxing investors more heavily on gains from capital they have put at risk really works as a revenue raiser. What it does risk is discouraging entrepreneurialism and investment, which the country needs to boost growth. Any move to bring CGT rates closer to income tax rates at the next Budget could not only act as a drag on investment, business activity and growth, but also fail to bring in significant revenues.  

‘A broader wealth tax which is being mooted at the moment would similarly risk actually hitting overall tax revenues by encouraging wealth creators, who are also significant taxpayers, to leave the UK.’ 

NOTES 

[1] Capital Gains Tax commentary - GOV.UK 

[2] These annual CGT liability statistics lag because, while gains on property sales are reportable online within 60 days, on other assets they are only confirmed by submissions on self-assessment tax returns received by HMRC made before the end of the January deadline this year. 

[3] https://www.gov.uk/government/statistics/hmrc-tax-and-nics-receipts-for-the-uk