HMRC closed 9,800 investigations into underpaid Capital Gains Tax in the 2024 to 2025 tax year, up 26% on the year before, according to Freedom of Information figures obtained by accountancy firm Lubbock Fine. The crackdown recovered £266 million, with the average underpayment per case rising to £27,142.
The numbers behind the crackdown:
- 9,800 CGT investigations closed in 2024 to 2025, up from 7,800 the year before — the highest total since the pandemic
- £266 million recovered, a 46% rise on the £182 million collected in 2023 to 2024
- Average underpaid tax per case: £27,142, up from £23,333
- The annual tax-free CGT allowance has fallen from £12,300 to just £3,000 in three years
- HMRC’s data-matching is widening, from Land Registry and SDLT property data to new crypto reporting rules from 2026
Why HMRC is targeting capital gains
The figures, reported by Lubbock Fine following a Freedom of Information request, put CGT investigations at their highest level since the pandemic. Total tax recovered rose 46% year-on-year, from £182 million in 2023 to 2024 to £266 million in 2024 to 2025, while the average underpaid tax found per case climbed from £23,333 to £27,142.
Lubbock Fine said cryptocurrency investors have become a particular target, with many still underestimating how closely HMRC now tracks digital-asset gains. Graham Caddock, director at the firm, said: “Cryptocurrencies were renowned for being the ‘wild west’ of investing.”
Better cross-checking against records HMRC already holds, and a widening set of third-party data feeds, mean discrepancies that might once have slipped through are now more likely to be picked up.
A shrinking allowance catches more ordinary sellers
Behind the rise sits a tax-free allowance that has shrunk sharply.
The annual exempt amount, which determines how much gain can be realised before Capital Gains Tax is due, fell from £12,300 in the 2022 to 2023 tax year to £6,000 in 2023 to 2024, and has been frozen at £3,000 for individuals since the 2024 to 2025 tax year, according to HMRC’s published rates and allowances. The exemption for most trusts is £1,500.
That 75% cut over three years means Capital Gains Tax is no longer confined to wealthy investors or professional landlords.
Ordinary sellers of shares, second homes, buy-to-let properties or cryptocurrency can now generate a taxable gain on disposals that would once have sat comfortably within the old £12,300 allowance, often without realising they have any reporting obligation at all.
The £3,000 allowance is not the same as the reporting threshold
One of the most common points of confusion is the difference between the tax-free allowance and the separate reporting threshold.
The £3,000 annual exempt amount determines whether tax is owed. The reporting threshold determines whether HMRC needs to be told about a disposal at all, and the two are no longer linked.
According to HMRC guidance, anyone registered for Self Assessment must report gains via the SA108 Capital Gains Summary if total disposal proceeds for the year exceed £50,000, even if no tax is due and even if the sale resulted in a loss.
This £50,000 figure used to track four times the allowance, but HMRC fixed it at £50,000 from the 2023 to 2024 tax year onwards, so it no longer falls as the allowance has. Reporting is also required where total gains exceed £3,000, or where losses are being claimed.
That leaves two traps: proceeds over £50,000 must be reported even with no tax to pay, and gains over £3,000 must be reported even where proceeds stayed under £50,000. Disposals held entirely within an ISA fall outside both rules.
Rates, and the trap in the October 2024 change
Capital Gains Tax on most assets is charged at 18% within an individual’s basic-rate band and 24% above it, rates that have applied since the Autumn Budget on 30 October 2024, aligned with the rates already used for residential property.
Business Asset Disposal Relief and Investors’ Relief, both available up to a £1 million lifetime limit, have followed their own timetable: 10% before 6 April 2025, 14% for 2025 to 2026, and 18% from 6 April 2026.
The main rates changed mid-way through the 2024 to 2025 tax year, when the Budget lifted them from 10% and 20% to 18% and 24% for disposals made on or after 30 October 2024.
HMRC has confirmed that Self Assessment does not automatically apply the correct rate either side of that date, so anyone with 2024 to 2025 disposals spanning the Budget needs to use HMRC’s online Capital Gains Tax adjustment calculator and enter the adjustment manually.
Getting it wrong in either direction can mean an unexpected under- or overpayment and, for those who underpaid, a possible investigation.
The 60-day property deadline and other common mistakes
Gains on UK residential property that isn’t a main home — a second home or buy-to-let, for example — must be reported and paid within 60 days of completion through HMRC’s Capital Gains Tax on UK Property service, separately from and earlier than the Self Assessment deadline.
Missing it is a frequent trigger for penalties and, in turn, investigations. Main homes are usually exempt under Private Residence Relief.
Other common mistakes include treating crypto swaps, gifts to non-spouses or spending crypto as tax-free when they are, in fact, disposals; miscalculating a gain by omitting allowable costs such as legal fees, improvements or stamp duty; applying the wrong rate to a disposal that straddles 30 October 2024; and assuming low proceeds mean no reporting is needed, when gains alone can trigger the obligation.
Why more people are being caught
Several data sources now feed HMRC’s compliance work, and the pipeline is widening. Property sales are already flagged through Stamp Duty Land Tax returns filed by conveyancers on completion, plus data HMRC receives directly from the Land Registry.
From 1 January 2026, the UK’s adoption of the OECD’s Cryptoasset Reporting Framework means crypto exchanges and wallet providers must collect and report detailed user and transaction information to HMRC.
HMRC has also consulted on extending third-party reporting, which currently locks in bank interest and card-sales data under the Finance Act 2026, to cover dividend and other investment income, a change that would bring share dealing further into view.
Combined with HMRC’s existing Connect data-matching system, this leaves fewer disposals able to go unreported by accident.
Staying on the right side of HMRC
If you’ve sold shares, a second property, crypto or another asset this year, a few habits can help keep you clear of an investigation:
- Keep full records of what you paid, what you sold for, the relevant dates, and any allowable costs such as improvements, legal fees or stamp duty.
- Report UK residential property gains within 60 days of completion, using HMRC’s Capital Gains Tax on UK Property service.
- Use HMRC’s real-time CGT service or your Self Assessment return for other assets, checking whether you meet the £50,000 proceeds or £3,000 gains reporting triggers.
- If you disposed of assets either side of 30 October 2024, use HMRC’s Capital Gains Tax adjustment calculator to work out the correct split-year rate.
- Claim any allowable losses by telling HMRC within four years of the end of the tax year they arose in. Once reported in time, they can be carried forward indefinitely to offset future gains.
If you think you’ve overpaid — by applying the wrong rate, or missing a cost or relief — you can usually amend a 2024 to 2025 return until 31 January 2027 and claim a refund.
And if you’ve spotted an error the other way, an unprompted disclosure to HMRC typically reduces any penalty considerably, so it’s worth acting before HMRC gets there first.
For a fuller breakdown of how the allowance works and ways to reduce a CGT bill, Tax Rebate Services’ guide to the Capital Gains Tax allowance sets out the calculations in more detail.
Key Takeaways
- HMRC closed 9,800 CGT investigations in 2024 to 2025, up 26%, recovering £266 million, according to Lubbock Fine’s FOI figures
- The tax-free allowance has fallen from £12,300 to £3,000 in three years, pulling far more ordinary sellers into scope
- You must report gains if proceeds exceed £50,000 or gains exceed £3,000, even if no tax is due
- CGT rates are 18% and 24%, with a rate change from 30 October 2024 that Self Assessment doesn’t calculate automatically
- Property sales need reporting within 60 days; other assets go through Self Assessment or HMRC’s real-time service
- If you’ve overpaid, you can usually amend a 2024 to 2025 return until 31 January 2027
Written by:
Tax Rebate Services Editorial Team
Reviewed by:
Tony Shanks
,
qualified Taxation Technician (ATT)
Last updated:
This article provides general information and is correct as at the date shown. It isn't personalised tax advice — for help with your own circumstances, speak to a qualified adviser or HMRC.
