3 lesser-known situations that could trigger a Capital Gains Tax charge

During her October 2024 Budget, chancellor Rachel Reeves increased the rate of Capital Gains Tax (CGT) for non-property assets with immediate effect. This change came after the previous Conservative government reduced the threshold at which you start paying CGT several times.

All this means you could be more likely to receive a large CGT bill in the future.

Understanding your liability and finding ways to potentially mitigate a CGT bill could help you sell and transfer ownership of assets more tax-efficiently. However, tax rules can be complex and there are some lesser-known situations that could trigger a CGT charge without you realising.

Read on to learn more.

You may pay Capital Gains Tax on profits when selling certain assets

CGT is a tax on the profits you earn when selling qualifying assets. This might apply to:

Stocks and shares
Certain business assets
A property that isn’t your main home
Most personal possessions worth more than £6,000 (excluding your car).

When you sell one of these assets, any profits that exceed your Annual Exempt Amount (£3,000 in 2025/26) will be taxed at:

18% if you’re a basic-rate taxpayer
24% if you’re a higher- or additional-rate taxpayer.

These rules are relatively straightforward. For instance, if you purchased some shares for £5,000 and later sold them for £10,000, you’d make £5,000 profit.

If you haven’t used any of your Annual Exempt Amount that year, and can apply the full amount, you’d then pay CGT on the remaining £2,000.

As a higher- or additional-rate taxpayer, you would pay £480.

Yet, there are some more complex situations where the rules are less clear. It’s important that you understand how CGT might be applied in these circumstances.

3 lesser-known situations that might trigger a Capital Gains Tax charge

1. Giving away assets

If you give away assets, you won’t earn any profits, so you may assume that there is no CGT to pay. However, this isn’t normally the case. CGT is still calculated based on the difference between the value when you purchased the assets and the value when you give them away.

Using the previous example, you’d still pay the same amount of CGT if you purchased shares for £5,000 and then gave them away when they were worth £10,000.

The only exception to this is that when you give assets to a spouse or civil partner, you won’t pay CGT right away. Yet, if they later sell the assets, your spouse or civil partner may pay CGT. The amount is based on the value of the asset when you purchased it, and the value when they eventually sell them.

Bear in mind that your spouse or civil partner has their own Annual Exempt Amount to use. As such, even though there may be some tax to pay, passing assets between you and using both Annual Exempt Amounts could be an effective way to potentially mitigate CGT.

2. Selling a property for less than you paid for it

In some cases, you might sell assets at a loss. For instance, you may purchase some shares that fall in value before you sell them. You can usually offset these losses against other gains in that tax year to reduce your tax liability.

If you have losses from previous years, you can carry these forward, provided you report the losses to HMRC within four years of the end of the tax year in which you made the sale.

Despite this, there are certain situations when selling an asset at a loss will still attract some CGT. This often happens when selling properties.

When you sell a property that isn’t your main home, the CGT liability is calculated based on the market value, not the price you sell it for. As such, even if you sell a property at a loss, you might still pay CGT.

3. Selling inherited assets

When a loved one passes away and you inherit assets from their estate, it’s important to consider the tax you might pay.

Normally, this means calculating and paying Inheritance Tax (IHT) on the estate. However, if you sell inherited assets there may be CGT to pay too.

You might decide to sell certain assets, such as a property or some shares, during the probate process. If the value of the asset has risen since the person passed away, CGT may be payable on any profits that exceed the Annual Exempt Amount.

Conversely, you might decide to keep the assets you inherit. Beneficiaries of the estate inherit the assets at their value when the probate process is completed. For example, if a property is worth £200,000 when the person passes away, and the value increases by £5,000 during the probate process, you will inherit it at a value of £205,000.

If you later sell an asset for more than this, you may pay CGT on any gains that exceed your Annual Exempt Amount.

Get in touch

We can help you understand the complexities of CGT, so you can sell or transfer ownership of assets tax-efficiently.

Please contact us at hello@ardentuk.com or call or WhatsApp us on 01904 655 330. As an award-winning financial advice company with advisers included in the 2025 VouchedFor Top Rated guide, you can be sure that we’re a bona fide company providing excellent advice and high-quality service.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate tax planning.

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