Record £16.7bn of CGT receipts registered by HMRC

Record amounts of capital gains and tax were recorded in the 2021 to 2022 tax year with HMRC recording Capital Gains Tax (CGT) liability of £16.7bn for 394,000 taxpayers. The latest figures from HMRC revealed that liability was released on £92.4bn of gains. Both the total CGT liability and the amount of gains have increased by 15% from the previous year, while the number of taxpayers has increased by 20%. It found that most CGT comes from the small number of taxpayers who make the largest gains. In the 2021 to 2022 tax year, 45% of CGT came from those who made gains of £5m or more. This group represents less than 1% of CGT taxpayers each year. In the 2021 to 2022 tax year, HMRC said as income and size of gain increased, the number of individual taxpayers decreased. In that year, 45% of gains for CGT-liable individuals came from the 12% of individuals with taxable incomes above £150,000, the additional rate threshold for Income Tax. Some 7% of CGT came from CGT disposals that qualified for Business Asset Disposal Relief (BADR). BADR was claimed by 47,000 taxpayers on £12.6bn of gains in the 2021 to 2022 tax year, resulting in a total tax charge of £1.2bn. In addition, London and the South East of England accounted for around half of total gains (49%) and tax liability (51%) in the 2021 to 2022 tax year. These figures are broadly constant over time and there is a stable regional distribution overall. HMRC also revealed The Capital Gains Tax on UK property service was used by 139,000 taxpayers to report 151,000 disposals of residential property in the 2022 to 2023 tax year for a total liability of £1.8bn. These figures are similar to the figures from the 2021 to 2022 tax year, which in turn showed a 56% and 60% increase in the number of disposals and total liability from the 2020 to 2021 tax year. This increase from the 2020 to 2021 tax year reflects a wider increase in activity in the residential property market following the first year of the COVID-19 pandemic. It may also reflect more people using the Capital Gains Tax on UK property service since its introduction in the 2020 to 2021 tax year. Toby Tallon, tax Partner at Evelyn Partners, said: “CGT receipts have delivered another bumper year for the Treasury. The total amount of gains in 2021/2022 represented a 15% increase from the previous year, while the number of taxpayers increased by 20%. “It should be remembered that there is always a lag in the annual tax data being published. This latest update from HMRC relates to the 2021/2022 tax year, but there is some interesting accompanying commentary. In November 2020 the Office of Tax Simplification published a report on CGT in which they made a recommendation to ‘consider more closely aligning Capital Gains Tax with Income Tax rates’.” He added: “HMRC has suggested in its update today that these recommendations (which weren’t implemented) could have driven taxpayers to bring forward disposals in response to anticipated tax rises. HMRC also acknowledges that that some of the increase in CGT liabilities was driven by the lifetime limit on Business Asset Disposal Relief being reduced.”

Record £16.7bn of CGT receipts registered by HMRC

Some 7% of CGT came from CGT disposals that qualified for Business Asset Disposal Relief (BADR)

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