Capital gains tax (CGT) is a tax on the profit or gain made when an individual or business sells or disposes of an asset that has increased in value. CGT is payable on gains made on most assets, including property, shares, and business assets.

The amount of CGT that an individual or business pays depends on various factors, such as the type of asset sold, the purchase price and sale price of the asset, and the individual's or business's overall income and tax status.

As of the tax year 2022/23, the UK's CGT rates for individuals are as follows:

• Basic rate taxpayers pay CGT at a rate of 10% on gains above the tax-free allowance of £12,700.
• Higher rate taxpayers pay CGT at a rate of 20% on gains above the tax-free allowance.
• Additional rate taxpayers pay CGT at a rate of 20% on gains above the tax-free allowance.

For residential property and carried interest (a type of investment in private equity), the rates are different:

• Basic rate taxpayers pay CGT at a rate of 18% on gains above the tax-free allowance.
• Higher rate and additional rate taxpayers pay CGT at a rate of 28% on gains above the tax-free allowance.

The tax-free allowance is an annual allowance, which means that individuals can make gains up to this amount without paying any CGT.

Individuals and businesses in the UK are required to report and pay CGT on their tax return for the relevant tax year. There are also various reliefs and exemptions available that may reduce or eliminate the amount of CGT payable, such as the annual exempt amount, which allows individuals to make gains up to a certain amount tax-free each year.