The Capital Gains Tax allowance for 2021/22 was £12,300 for individuals, personal representatives of deceased estates, and trustees for disabled people, with most other trusts receiving half that at £6,150.1GOV.UK. Capital Gains Tax Rates and Allowances The tax year ran from 6 April 2021 to 5 April 2022, and the allowance worked as a tax-free threshold: you owed Capital Gains Tax only on the portion of your gains above it. The figures still matter if you are filing late, amending an old return, or comparing that year against the much lower allowances in force now.
How the Annual Exempt Amount Worked
Section 3 of the Taxation of Chargeable Gains Act 1992 sets the annual exempt amount each year.2Legislation.gov.uk. Taxation of Chargeable Gains Act 1992 – Section 3 For 2021/22 the figure held at £12,300 for individuals and £6,150 for most trusts.1GOV.UK. Capital Gains Tax Rates and Allowances
It was a use-it-or-lose-it benefit. If your total gains for the year fell below £12,300, the unused portion disappeared. You could not carry it forward or bank it against a future disposal. Each tax year started fresh.
What Counted Toward Your Gains
You pay Capital Gains Tax when you dispose of a chargeable asset at a profit. In 2021/22 the main categories were personal possessions worth £6,000 or more (jewellery, art, antiques, and the like, with cars specifically excluded), property that was not your main home, shares and investments held outside tax-sheltered accounts, and business assets such as land, buildings, machinery, and goodwill.3GOV.UK. Capital Gains Tax – What You Pay It On
Assets held inside an ISA or a pension sat entirely outside the charge, no matter how large the gain. Shares sold at a £50,000 profit from within an ISA produced no CGT liability at all.
The Rates Above £12,300
Once your gains crossed the exempt amount, the rate depended on the type of asset and on your other income for the year. The rates that applied throughout 2021/22 were:1GOV.UK. Capital Gains Tax Rates and Allowances
- Residential property: 18% for basic rate taxpayers, 28% for higher and additional rate taxpayers.
- Other chargeable assets, including shares, non-residential property, and business assets: 10% for basic rate taxpayers, 20% for higher and additional rate taxpayers.
- Trustees and personal representatives: 28% on residential property gains, 20% on everything else.
Whether the lower or higher rate applied depended on your taxable income plus the gain together. If adding the gain to your income kept you inside the basic rate band, you paid the lower rate. If the gain pushed you across the threshold, the portion above it was taxed at the higher rate. A single gain could be split between both rates.
Costs You Could Deduct Before Comparing to the Allowance
The gain HMRC measures against the £12,300 threshold is a net figure. You can subtract costs that relate directly to buying, improving, or selling the asset:4HM Revenue & Customs. Capital Gains Manual – CG15250
- Professional fees paid to surveyors, valuers, auctioneers, accountants, estate agents, and solicitors.
- Transfer costs such as Stamp Duty Land Tax on the original purchase and conveyancing fees.
- Advertising costs incurred to find a buyer or seller.
- Capital improvements that enhanced the asset’s value, such as an extension or a loft conversion. Routine maintenance and redecoration do not qualify.5GOV.UK. Tax When You Sell Your Home – Work Out Your Gain
Every deduction must have been incurred wholly and exclusively for the acquisition, improvement, or disposal of the asset. Keep receipts and invoices. If HMRC queries a figure and you cannot support it, the deduction may be disallowed.
How Losses Interact With the Allowance
Losses are the piece most people miss, and they can quietly waste your allowance. When you sell an asset for less than you paid, the loss offsets gains in the same tax year or can be carried forward indefinitely.6GOV.UK. Capital Gains Tax – Losses
The order is fixed. Current-year losses come off first, even if that drops your net gain below £12,300. You have no choice. Losses carried forward from earlier years only need to be used to the extent that they bring your gains down to the exempt amount; the rest stays in reserve.
Take a worked example. A £15,000 gain and a £10,000 loss in the same 2021/22 year net to £5,000. That sits below £12,300, so no tax. But £7,300 of the allowance is gone, unused, because the current-year loss had to be applied in full first. Spreading those disposals across two tax years would have sheltered more.
Your Main Home: Private Residence Relief
The largest exemption most people encounter is Private Residence Relief, which can wipe out the gain on the sale of a main home. Full relief applies where the property has been your only or main residence throughout your ownership, you have not been away for longer than the allowed periods of absence, the total area including the building does not exceed half a hectare unless a larger area is needed for reasonable enjoyment, and no part has been used exclusively for business.7GOV.UK. HS283 Private Residence Relief Working from a room that doubles as personal space does not disqualify you.
Even if the property stopped being your home before sale, the final nine months of ownership always qualify as long as it was your main residence at some point. That final period extends to 36 months for disabled individuals and care home residents.
Reporting and Paying
How you reported the gain depended on what you sold and when it completed.
UK Residential Property
If you sold UK residential property on or after 27 October 2021 and owed Capital Gains Tax, you had to report the gain and pay within 60 days of completion. Sales completing between 6 April 2020 and 26 October 2021 had a tighter 30-day window.8GOV.UK. Report and Pay Your Capital Gains Tax – Property Sold On or After 6 April 2020 The property report was separate from and additional to your Self Assessment return, and missing the 60-day deadline triggered penalties and interest.
Everything Else
Other chargeable gains went through Self Assessment on form SA108, the Capital Gains Summary attached to your SA100 return.9GOV.UK. Self Assessment – Capital Gains Summary (SA108) Property gains already reported under the 60-day rule still had to appear on the SA108 to reconcile the year. The 2021/22 online filing deadline was 31 January 2023, with paper returns due by 31 October 2022.
If You Are Filing Late
HMRC’s late-filing penalties escalate:10GOV.UK. Self Assessment Tax Returns – Penalties
- An automatic £100 the moment the deadline passes, even if you owe no tax.
- After 3 months, daily penalties of £10, up to £900.
- After 6 months, a further 5% of the tax due or £300, whichever is greater.
- After 12 months, another 5% of the tax due or £300, whichever is greater.
Late payment adds its own charges. Tax unpaid more than 30 days past the due date attracts 5% of the outstanding amount, with a second 5% at five months and a third 5% at eleven months.11HM Revenue & Customs. Self Assessment Legal Framework – SALF308A Interest runs on the unpaid tax from the original due date. If there is still a 2021/22 CGT liability outstanding, dealing with it now limits how much more it grows.
How the Allowance Has Fallen Since
The 2021/22 figure was the last at that level before sharp cuts:1GOV.UK. Capital Gains Tax Rates and Allowances
- 2022/23: £12,300 (unchanged)
- 2023/24: £6,000
- 2024/25: £3,000
- 2025/26: £3,000
For trusts, the corresponding figures moved from £6,150 to £3,000 and then to £1,500. A gain that was fully sheltered by the £12,300 allowance in 2021/22 can now leave most of itself exposed. Anyone comparing an older tax position with a current one needs to factor that reduction in before drawing conclusions.