What is capital gains tax and who pays it?
Answered 11 March 2026
Here is a comprehensive answer based on the authoritative sources found.
What is Capital Gains Tax and Who Pays It?
What the law says
The charge to Capital Gains Tax (CGT)
CGT is charged on chargeable gains accruing on the disposal of assets. The core statutory provision is TCGA 1992, s.1:
"Capital gains tax is charged for a tax year on chargeable gains accruing in the year to a person on the disposal of assets."
CGT is charged on the total chargeable gains in a tax year, after deducting:
- any allowable losses accruing in the same tax year; and
- so far as not previously deducted, any allowable losses from earlier tax years.
Companies do not pay CGT — they pay Corporation Tax on chargeable gains instead, in accordance with CTA 2009 s.2 and other relevant Corporation Tax provisions.
HMRC guidance / practice
Who pays CGT?
CGT is paid by the following persons:
- Individuals (including children) — on chargeable gains from disposing of assets.
- Trustees — trustees are chargeable to CGT unless the trustees (or a majority of them) are neither resident nor ordinarily resident in the UK and the general administration of the trust is carried on abroad.
- Personal representatives of deceased persons — chargeable to CGT if the deceased was resident (or ordinarily resident) in the UK at the time of death.
- Partners in a partnership — individuals pay CGT; companies pay Corporation Tax on their share of gains.
Annual Exempt Amount (AEA)
Individuals, personal representatives, and certain trustees receive an annual tax-free allowance (the AEA). Gains within the AEA are not chargeable to CGT. The AEA applies to one tax year only — it cannot be carried forward or back. There is no equivalent AEA for companies.
Reporting and payment
CGT on UK property disposals can be reported and paid by UK tax-resident individuals, non-UK tax-resident individuals, trustees, personal representatives, and agents through HMRC's online CGT on UK Property Account.
In summary: CGT is a tax on the profit (gain) made when you dispose of an asset that has increased in value. It is paid by individuals, trustees, and personal representatives — but not by companies (which pay Corporation Tax on gains instead).
Citation sources
Part 1 Capital gains tax and corporation tax on chargeable gains Chapter 1 Capital gains tax Charge to capital gains tax Capital gains tax 1 1 Capital gains tax is charged for a tax year on chargeable gains accruing in the year to a person on the disposal of assets. 2 As a result of section 4 of CTA 2009, capital gains tax is not charged on gains accruing to a company, but corporation tax is chargeable instead in accordance with— a section 2 of CTA 2009, b Chapter 2 of this Part, and c other rel
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