Capital gains tax (CGT) is the tax due when you dispose of assets that have increased in value. Disposing in this context can mean the selling or gifting of assets.
Every individual is entitled to a tax free CGT exemption of £6,000 in 2023/24, after which any further capital gains are taxed at the following rates:
Basic rate - CGT rate (10%). Residential property (18%)
Higher and additional rate tax bands - CGT rate (20%). Residential property (28%)
The CGT exemption is a ‘use it or lose it’ exemption, meaning that any unused amount cannot be carried forward to be used in a future tax year. This makes it important to ensure that you are using the exemption each year where possible to gradually reduce any capital gains in a tax efficient manner.