The UK Government collected a record £24.2 billion in capital gains tax during the 2024 to 2025 tax year after rate increases boosted tax revenues.
The total represents an 89 per cent increase from the previous year as Labour tax hikes on businesses continue to support public finances. The main rate increases took effect midway through the financial year.
Capital Gains Tax is charged on profits made when selling or disposing of assets such as company shares, second homes, buy-to-let properties, and personal items. In the UK tax system, HM Revenue and Customs calculates the tax based on the gain in value rather than the total payment received.
Capital gains tax rate increases
Former Chancellor Rachel Reeves increased tax rates in her October 2024 Budget, putting additional financial pressure on business owners and investors. Rates for basic-rate taxpayers rose from 10 per cent to 18 per cent, while higher-rate taxpayers faced a 24 per cent levy on asset sales, up from 20 per cent previously.
Historically, capital gains tax rates have been set lower than income tax rates because investment profits involve financial risk, whether through entrepreneurial ventures or market investments.
HM Revenue and Customs stated that public speculation before the Budget contributed to the sharp increase in capital gains receipts, as asset owners acted before tax rises came into force.
A reduction in future tax collections would force new Chancellor John Healey to find alternative ways to expand his fiscal headroom. Political leaders, including Andy Burnham, will also monitor whether lower tax receipts create funding pressures for public services.
Elizabeth Bradley, a partner at law firm BCLP, said the sharp rise in tax liabilities might offer "short-term relief, but it may be a sugar hit caused by forestalling."
She added: "If today’s exceptional spike reflects forestalling before the 2024 Autumn Budget, the behavioural response to potential CGT rate changes may now shift."
Taxpayer numbers and geographic concentration
The overall number of capital gains taxpayers jumped 45 per cent during the 2024 to 2025 tax year to an all-time high of 584,000 people. This increase followed consecutive annual reductions to the personal tax-free allowance by the Treasury.
During the same period, 105,000 more taxpayers reported gains above the previous year's threshold limits of £6,000 for individuals and £3,000 for trusts.
Tax payments remained heavily concentrated among high earners. A small group representing less than one per cent of total capital gains taxpayers contributed 45 per cent of all receipts, with each individual in that bracket making gains of £5 million or more.
Geographically, taxpayers living in London and the South East of England accounted for approximately half of all total capital gains and overall tax liabilities in the country.
Investor behavior and exit tax concerns
Tax specialists warn that bringing forward asset sales could cause overall tax receipts to decline in upcoming years, particularly if wealthy individuals relocate outside the United Kingdom to avoid higher tax bills.
Pete Fairchild, National Head of Private Clients at tax firm Crowe, said: "The concerns over rising Capital Gains Tax rates have no doubt led many people to bring forward a transaction and sell an asset earlier than expected. Whether the rate ultimately increased, the government has collected tax anyway."
He added: "While cabinet ministers will possibly pat themselves on the back for achieving this outcome, some words of caution: the trend of wealthy people leaving the UK continues because of these measures, not helped with further concerns about the potential of an exit tax being brought in."
Elizabeth Bradley noted that future decisions by taxpayers could impact upcoming fiscal announcements by the Government.
She added: "Some taxpayers could accelerate disposals ahead of the forthcoming Autumn Statement from the new Chancellor, while others may simply defer gains for years, a pattern seen repeatedly after past CGT reforms. Either way, today’s rise may not translate into stronger receipts for the rest of this Parliament."
Cryptocurrency gains and tax reporting
Official figures released by HM Revenue and Customs also detailed capital gains reported from digital asset trading.
In the 2024 to 2025 tax year, 240 individuals reported individual capital gains exceeding £1 million from cryptoassets such as Bitcoin and Ethereum. Overall, 17,600 individuals declared total taxable gains from cryptocurrencies worth £1.38 billion.
