Capital gains tax (CGT) liabilities in the UK fell by 18 per cent year-on-year to £12.1bn in 2023/24, despite the number of people paying CGT increasing, the latest figures from HMRC have revealed.

In the 2023/24 tax year, the total CGT liability was £12.1bn, realised on £65.9bn of gains, with gains down by 19 per cent year-on-year.

However, the number of people paying CGT in 2023/24 increased by 1 per cent year-on-year to 378,000.

The increase was primarily driven by the reduction in the annual exempt amount (AEA) from April 2023, which brought in up to 87,000 additional taxpayers into the scope of CGT.

Of the 2023/24 CGT take total, 40 per cent came from individuals and trusts who made gains of £5m or more.

Meanwhile, in 2024/25, 163,000 taxpayers filed a CGT on UK property return, reporting 183,000 disposals and £10.3bn of gains on residential property for a total CGT liability of £2.2bn.

This represented a 28 per cent increase year-on-year for the number of disposals, while gains and liabilities reported through the services rose by 39 per cent to £10.3bn and 33 per cent to £2.2bn respectively.

These are the highest figures on record since the introduction of the CGT on UK property service in April 2020.

“These statistics reveal two telling points,” said Evelyn Partners managing director, Jason Hollands. “One is that although 87,000 additional taxpayers were drawn into CGT liabilities in 2023/24 due to the cut in the annual exempt allowance, overall liabilities fell by 18 per cent.

“Second, there was a big surge in CGT on residential property in 2024/25, with a remarkable 33 per cent increase in liabilities as people with investment or second properties sold up, with a 28 per cent increase in disposals on the previous year.

“While this data tells us nothing directly about trends for investors realising capital gains under the current government - as it pre-dates the General Election – it does indicate that the quite drastic cut to the annual exempt allowance from £12,300 in 2022/23 to £6,000 under the previous Conservative administration did not give Treasury coffers the boost that ministers were obviously hoping for.

“More recent receipts data suggest that the further halving of the exemption in 2024/5 to £3,000 did nothing to improve the CGT take.

“This update suggests that while some investors have been deterred from crystallising gains, there was a surge of property owners in 2024/25 disposing of their buy-to-let or second homes, either for fear of further CGT rises or because of conditions in the BTL market, or both.”

Hollands noted that it remained to be seen what the impact of the increase in CGT rates announced in last year’s autumn Budget will be, with the wealth manager observing clients crystallising gains ahead of the event.

“This may well have generated a bump in CGT reliefs in the earlier part of the 2024/25 tax year but the trend thereafter could well be downward as investors and business owners change their behaviour,” Hollands continued.

“Receipts show that CGT brought in £16.93bn in 2022/23, £14.50bn in 2023/24 and just £13.06bn in 2024/25.

“This year-by-year slide in CGT receipts has taken place during a period when the annual capital gains exemption was drastically cut, which suggest that investors are changing their behaviour and holding onto or rearranging their assets.

“It doesn’t bode well for the Chancellor’s hopes that her CGT rate hikes will bolster the public purse over the coming years.”

Also commenting on the figures, Utmost Wealth Solutions head of UK technical services, Simon Martin, said: “The significant rise in property disposals led to a record level of transactions and tax paid which was stimulated by the hike to CGT rates as people looked to sell while the lower-rate regime was still in place.

“The fall in CGT liability in 2023/24 reflects a period of higher interest rates and depressed asset valuations triggering a drop off in disposals through this period. Since then, we have seen fiscal tightening of the non-dom regime while the Chancellor also announced significant increases in the headline CGT rates and a halving of the annual exemption at 2024 Autumn Budget.

“Looking ahead from now, the altered CGT regime is expected to boost receipts by as much as 50 per cent in the current tax year. However, it will be interesting to see whether there is a noticeable decline for those taxpayers with the largest potential gains amid reported outflows of high and ultra high net worth individuals.”

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