The UK's capital gains tax (CGT) receipts reached a record £24.3 billion in the 2025-26 tax year, an almost 80% increase from the £13.7 billion collected in the previous year. This significant surge is attributed to the government's decision to cut the annual exempt amount to £3,000 and raise CGT rates in October 2024. This marks a 244% increase over the past decade, making CGT "a decent cash machine for the taxman," according to a senior industry figure.
The policy changes, implemented by Chancellor Rachel Reeves, aimed to broaden the base of investment income subject to taxation. However, the exact composition of these record receipts—specifically, how many individual taxpayers, including ordinary investors, small landlords, and wealthier sellers, have been newly affected—is not yet publicly disclosed. This lack of detailed distribution is drawing scrutiny from advisers and campaigners who seek to understand the practical impact on different segments of the population.
The increase has been driven by two main factors: the drastic reduction in the annual CGT allowance from £12,300 in 2022-23 to £3,000 for 2025-26, and the higher tax rates introduced in October 2024. Higher-rate taxpayers now pay 24% on gains, while basic-rate taxpayers face 18% in some cases. This combination of a lower allowance and increased rates has led to "fiscal drag," pushing more taxpayers into paying CGT, even on smaller gains or gains largely due to inflation.
Industry experts like Sean McCann of NFU Mutual also point to strong investment markets and landlords offloading properties ahead of new Renters Rights legislation as contributing factors. The tax changes mean that gains from investments not held in an ISA, property that is not a main home, and personal possessions worth £6,000 or more are increasingly subject to tax. HMRC's data also showed a record £17 billion in CGT receipts in January 2026 alone, up nearly 70% year-on-year, primarily due to self-assessment payments for the 2024/25 tax year, where many investors disposed of assets anticipating the October 2024 rate hikes.
For everyday households, the practical consequence is that assets held outside tax-advantaged wrappers need careful review. The reduced allowance means that selling investments, second properties, or collectibles can now trigger a tax bill where none would have previously occurred. Financial advisors recommend utilizing ISA allowances and strategically timing asset sales to spread gains across tax years to mitigate the impact of the lower allowance and higher rates.
