Reporting Capital Gains in Your Self-Assessment Tax Return

When completing a self-assessment tax return, you are required to report all income and gains from various sources earned throughout the tax year, up to its final day. Even if tax has already been deducted at the source, you must still declare the income along with the tax deducted. This ensures you are not taxed twice on the same income while fulfilling your reporting obligations.

Reporting regular income is often straightforward. However, certain items, such as gains from the disposal of assets during the tax year, can be more complex. It is important to note that not all disposals need to be declared. In this article, we will outline which disposals must be reported and provide guidance on how to include them in your tax return.

What is a Capital Gain, and When is it Paid?

Capital gains tax (CGT) is payable on the disposal of "chargeable assets." These include:

• Personal items valued over £6,000
• Properties not considered your main residence
• Your primary residence if used for business or rental purposes
• Shares, whether listed or unlisted
• Business assets

CGT may also apply if you give an asset away for free. If you co-own an asset, you are responsible for CGT on your share of the gain.

Some assets are exempt from CGT, including:

• Shares held in an ISA
• UK government gilts and Premium Bonds
• Winnings from betting, lotteries, or pools
• Most cars

What Expenses Can be Deducted to Calculate the Gains?

Capital gains are the difference between an asset's sales proceeds and allowable disposal costs. These allowable costs include:

• Purchase price: The original cost of acquiring the asset.
• Incidental costs of purchase and sale: Expenses such as legal and professional fees, stamp duty, and agent fees.
• Capital improvements: Costs of enhancing or upgrading the asset, provided these are not maintenance expenses and have added value to the asset.

After calculating the gain, you can deduct the Capital Gains Tax (CGT) Allowance from the total, reducing the taxable amount. Further details about the CGT allowance are covered in the next section.

Do Gains Below the CGT Allowance Need to Be Reported?

Every taxpayer benefits from an annual CGT allowance, which is £6,000 for the 2023/24 tax year and reduces to £3,000 from 2024/25 onwards. You only pay CGT on gains exceeding this allowance.

If your gains are below the allowance, there is no tax liability, and reporting is generally unnecessary unless all the following apply:

• The disposal occurred in the 2024/25 tax year
• The disposal’s proceeds were £50,000 or more
• You are registered for self-assessment

For disposals in the 2023/24 tax year or earlier, reporting is required if:

• The disposal proceeds were four times the CGT allowance (£24,000 for 2023/24)
• You are registered for self-assessment

Is it Necessary to Include the Disposal of UK Property in the tax Return?

There are special rules for disposing of UK Properties by UK residents and Non-residents. If you are a UK resident disposing of residential property, you must report the sale via a UK Property Disposal Return within 60 days of the completion date, but only if there is tax to pay. For non-UK residents, the reporting requirement is broader and includes both residential and commercial properties, even when no tax is due.

Regardless of whether a UK Property Disposal Return was filed, gains must also be included in the Self-Assessment Tax Return using the SA108 supplementary page. The following information is required:

• The number of properties sold
• Disposal proceeds and allowable costs
• Resulting gains

If claiming reliefs such as Private Residence Relief, check Box 8 of SA108.

For disposals already reported via the UK Property Disposal Return, you must record the gains and any tax payments in Box 9 and Box 10 of the SA108, respectively.

Do I Need to File a Tax Return if I Have Sold a UK Property as a Non-Resident?

As mentioned earlier, as a non-UK resident, you are required to report the disposal of UK property within 60 days of the completion date, regardless of whether the transaction resulted in a gain or a loss. Non-residents benefit from the same Capital Gains Tax (CGT) allowance as UK residents.

A separate tax return is not necessary if the disposal has already been reported via a CGT return. However, if you are already obligated to file a tax return—for example, due to other income or gains—you must include the property disposal in your tax return.

When declaring the disposal of UK property or land as a non-resident, complete the following sections on the SA108 supplementary page:

• Boxes 52.1 and above: To provide details of the disposal.
• Box 54: Use the blank space to show the computation of the gain or loss.

Does Capital Gains Tax Apply to Cryptocurrency?

You may need to pay Capital Gains Tax when disposing of cryptoassets, such as cryptocurrency or Bitcoin, through selling, exchanging, using them for goods or services, or gifting (except to a spouse or civil partner).

To determine your tax liability, calculate the gain for each transaction by subtracting allowable costs (e.g., transaction fees or advertising) from the sale value. Special rules apply for transactions within 30 days and for pooled token costs. Report and pay tax via Self Assessment or the Capital Gains Tax real-time service, ensuring all figures are in pound sterling.

Maintain detailed records for every transaction, including token type, dates, values, and pooled costs. Additional records such as bank statements and wallet addresses should also be kept, as HMRC may request them for compliance checks. Non-UK residents may have different obligations. For more details, refer to HMRC’s Cryptoassets Manual.

Conclusion

By following the guidance in this article, you can navigate the complexities of capital gains reporting with greater confidence. Whether dealing with property disposals, exemptions, or allowances, being thorough and precise in your reporting helps avoid penalties and ensures compliance with HMRC requirements.

Careful attention to detail is crucial for non-residents or individuals with more complex financial situations, such as multiple property disposals or claims for relief. Filing within the required timelines, such as the 60-day rule for UK property disposals, is equally important.

Keeping clear records of your transactions and associated costs throughout the year will make the reporting process smoother. Proper preparation and understanding of your obligations can save you time, reduce stress, and potentially lower your tax burden.