Capital Gains Tax revenues hit ‘record’ £9.5bn

Capital Gains Tax (CGT) revenues hit a “record” high of £9.5bn in 2018-19, up from £8.8bn the year before, according to the latest data from HMRC.  

The number of people who had to pay capital gains tax (CGT) declined in the year, however, falling from 281,000 taxpayers in 2017-18 to 276,000 taxpayers in 2018-19.

Most of these payments, gained from selling valuables, were paid by high earners, with 40% of CGT paid by taxpayers who made gains of £5m or more, accounting for just 1% of CGT taxpayers. 

In the same period, over a quarter of CGT came from disposals that qualified for entrepreneurs’ relief, with relief claimed by 46,000 taxpayers on £27.7bn of gains, which resulted in a tax charge of £2.7bn.

According to HMRC, the amount of total gains eligible for entrepreneurs’ relief has more than doubled in the last eight years.

In addition, 74% of gains and 76% of tax charged at the entrepreneurs’ relief rate in 2018-19 came from 13% of individuals with qualifying gains of £1m or more.

A further 36% of gains and 37% of tax charged at the same rate came from 2% of individuals with qualifying gains of £5m or more.

CGT is paid if a taxpayer makes a profit after selling a valuable asset or assets, and the profit exceeds their CGT allowance, which will be £12,300 in the 2020-21 period.

The rate paid depends on what rate of income tax is paid by the individual. Basic-rate taxpayers are charged 10% on the sale of assets and 18% on property sales. Higher and additional-rate taxpayers are charged 20% on assets, and 28% on property.