HMRC has tripled its investigations into capital gains tax (CGT), with an extra £202.4 million of tax pulled in.
Capital gains tax is levied against profits on the disposal of capital assets such as second homes, share holdings, antiques, jewellery and more recently crypto currency. If your business is the purchase and sale of these types of assets, then this would be considered trading and subject to the relevant income tax, but if it is not a trade or a one off transaction it falls under capital gains tax.
The personal allowance for capital gain tax – the amount of profit you can make before paying tax – has dropped significantly in recent years, from £12,300 in 22/23 to £3,000 in the current 25/26 tax year, meaning that a lot more transactions have been pulled into the CGT regime with tax owing.
Recent years have seen an upsurge in cryptocurrencies, promoted on TikTok and Instagram, and purchased by people who may not be aware of their reporting requirements. Even if you reinvest your profits in other investments – i.e. you don’t have the money in your pocket – it is still subject to CGT. HMRC have sent thousands of ‘nudge’ letters to people they suspect of having CGT due, and it is always best to voluntarily disclose your earnings to HMRC if you want to avoid penalties and further action against you.
If you are unsure on if or what tax is due, it’s best you speak to a professional for guidance on your specific case.