When you sell an asset for more than you paid for it, you may need to pay Capital Gains Tax (CGT). In the UK, most people report this through their Self Assessment tax return.
For CIS workers, sole traders, and self-employed individuals, understanding how to correctly report your gains can save you from penalties and ensure you only pay what’s due.
What is capital gains tax?
Capital Gains Tax is a tax on the profit (gain) you make when you sell, give away, or otherwise dispose of an asset. You’re taxed on the gain, not the total sale price.
Example: Buy a property for £120,000 and sell it for £160,000. Your gain is £40,000.
When you need to report CGT via self assessment
You must report your gains if:
- They exceed the Annual Exempt Amount (£3,000 for 2025/26)
- Your total asset disposals exceed four times the exemption (£12,000)
- You made a gain on a property that isn’t your main home
- You sold shares or investments outside of an ISA or pension
- You disposed of business assets
CGT reporting deadlines
| Asset type | Deadline to report |
|---|---|
| UK Residential Property | Within 60 days of completion |
| All Other Assets | By 31 January following the tax year end |
Even if you report a property gain within 60 days, you must still include it on your Self Assessment tax return.
Step-by-step: Reporting capital gains tax via self assessment
1. Calculate your gain
Work out:
- Sale price (or market value if given away)
- Purchase price
- Allowable costs (e.g. solicitor fees, Stamp Duty, improvements)
2. Deduct your annual exemption
For 2025/26, individuals can make £3,000 in gains tax-free.
3. Apply the correct tax rate
- Basic rate taxpayers: 18% (shares and property)
- Higher/additional rate taxpayers: 24% (shares and property)
4. Complete the capital gains summary (SA108)
In your online Self Assessment:
- Add details for each asset sold
- Include acquisition and disposal dates
- Show proceeds, costs, and reliefs claimed
5. Submit and pay
- Submit your Self Assessment by 31 January
- Pay any CGT due by the same date to avoid interest or penalties
Common mistakes to avoid
- Forgetting to report small gains that push you over the exemption limit
- Missing the 60-day property deadline
- Using incorrect purchase or sale dates
- Not claiming allowable expenses or reliefs
- Forgetting to offset capital losses
Special notes for sole traders and CIS workers
If you dispose of business assets, you may qualify for Business Asset Disposal Relief, reducing your CGT rate to 10% on qualifying gains.
Always:
- Keep detailed purchase/sale records
- Track improvement costs
- Seek advice before selling high-value assets
Let Tax2u handle your CGT reporting
CGT rules can be complex, and missing deadlines can be costly. At Tax2u, we help CIS workers, sole traders, and self-employed individuals:
- Calculate gains accurately
- Claim all available reliefs
- Submit correct Self Assessment forms
- Avoid HMRC penalties
Report your capital gains with Tax2u – Fast, accurate, and stress-free.