Capital Gains Tax Planning Tips & Advice

Capital Gains Tax (CGT) can significantly impact the return you make when selling investments, property or other valuable assets, but with careful planning, it’s possible to reduce or even eliminate the tax you pay. 

There are a range of reliefs, exemptions and allowances that, when used strategically, can help you structure disposals in the most tax-efficient way. From making the most of your annual CGT allowance to timing sales, transferring assets between spouses and reinvesting gains into qualifying schemes, understanding the rules in advance can make a significant difference to your final tax bill. In the next two articles we’ll take a closer look at these and some of the options that may be available to you. 

Rates of CGT

The Capital Gains Tax (CGT) rates changed on 30 October 2024 so, for 2024/25, there are different rates to apply depending on the date of the transaction.

For disposals between 6 April 2024 and 29 October 2024 the gains, in excess of the annual exemption, are taxed as follows:

• 10% for basic rate taxpayers
• 20% for higher and additional rate taxpayers
• 18% and 24% for residential property gains
• 18% and 28% for gains from carried interest
• 20% for trustees and personal representatives

For disposals between 30 October 2024 and 5 April 2025 gains are taxed at the following rates:

• 18% for basic rate taxpayers
• 24% for higher and additional rate taxpayers
• 18% and 24% for residential property gains
• 18% & 28% for gains from carried interest
• 24% for trustees and personal representatives

For the current tax year, 2025/26, the rates are as follows:

• 18% for basic rate taxpayers
• 24% for higher and additional rate taxpayers
• 18% and 24% for residential property gains
• 32% for gains from carried interest
• 24% for trustees and personal representatives

The CGT rate on business assets qualifying for Business Asset Disposal Relief has increased from 10% to 14% for disposals made on or after 6 April 2025 and will increase to 18% for disposals on or after 6 April 2026.

From April 2026, all carried interest will be taxed under the income tax regime.

Tax planning tip: 

• Monitor rate changes and consider timing your disposals to benefit from lower rates.  

Annual exemptions

Each individual has an annual exemption of £3,000 from capital gains tax, which cannot be carried forward. Selling investments, such as shares or unit trusts, standing at a gain may use this annual exemption. If you wish to retain your investment, you could re-purchase it through your ISA or your spouse or civil partner could buy back that investment in their name. Selling your investment and purchasing a similar investment is also an option.

Tax planning tips: 

• Use your annual exemption strategically each year to realise gains tax-free.
• Consider transferring assets to your spouse or civil partner to double the tax-free allowance. 
• Use ISAs or similar investments to retain market exposure.

Bed and breakfasting

Bed and breakfasting is the practice of selling shares or other investments and then buying them back shortly afterwards in order to crystallise a capital gain or loss for tax purposes without permanently giving up ownership. However, an anti-avoidance rule applies to match sales and purchases made within a 30 day period, so the repurchase must be delayed beyond 30 days. 

Tax planning tip: 

• Avoid the 30-day rule by having your spouse or ISA repurchase the asset immediately.

Spouses and civil partners

Transfers of assets between married couples or civil partners are treated as occurring at no gain/no loss for tax purposes. The recipient inherits the donor’s base cost. This allows spouses or civil partners to utilise their own annual exemption or capital losses against the gain on sale.

Tax planning tip: 

Asset transfers between spouses or civil partners can potentially reduce the CGT liability on disposal by making both parties’ annual exemptions and losses available.  

Gifts and transfers to Trusts

Gifts to children or others and transfers to a Trust will trigger a capital gain based on the asset’s market value.  CGT holdover relief may be available to defer the gain, depending on what the asset is. Transfers to Trusts may also have inheritance tax implications.

Tax planning tip: 

• Consider whether holdover relief is available to defer CGT on gifts.
• Always evaluate the inheritance tax implications when gifting or using trusts.

In our next post, we will take a look at some of the other CGT measures you may wish to consider.

As always, these articles provide an overview of the various measures available and no action should be taken without seeking professional advice. At Ritchie Phillips, we pride ourselves on providing clear, pragmatic advice to help businesses, individuals and families. If you’d like to discuss any of the above, please get in touch.