Capital Gains
Tax

Yes, certain exemptions and reliefs can reduce your CGT liability. For individuals, the annual tax-free allowance (known as the annual exempt amount) currently allows you to realise a certain amount of gains before tax is payable. Entrepreneurs’ Relief (now Business Asset Disposal Relief) and Investors’ Relief may also be available, reducing the CGT rate from the top rate of 24% on qualifying business disposals. Private Residence Relief may apply when selling your main home, exempting gains on your primary residence. CGT may be deferred by reinvesting gains into qualifying investments, such as through Enterprise Investment Schemes (EIS) or Seed Enterprise Investment Schemes (SEIS)

The CGT rate depends largely on your income tax band. Basic rate taxpayers pay 18% on the portion of the gain that falls within their remaining basic rate band. For gains over the basic rate band, and for higher/additional rate taxpayers generally, the rate of tax is 24%. A special rate of 32% applies to certain investment fund managers where they are entitled to a share of the profits which arise in the fund(s) in question.

When disposing of a business, shares in a business, or an asset used in a business that you operate, CGT planning can help minimise the tax due. Business Asset Disposal Relief (BADR, formally known as Entrepreneur’s Relief) can reduce the CGT rate to 14% on qualifying gains (18% for disposals after 6 April 2026) up to a lifetime limit of £1 million. Other strategies may include gifting shares/assets to a spouse pre-disposal in order to utilise their own CGT allowances. Depending on individual circumstances, there may be an opportunity to defer CGT by reinvesting the gains into qualifying investments, such as through the Enterprise Investment Scheme (EIS) or Seed Enterprise Investment Scheme (SEIS).

Yes, transfers of assets between spouses or civil partners are usually exempt from CGT, meaning no tax is charged on the transfer. This can be a useful strategy to distribute gains between both partners, allowing each to make use of their annual CGT exemption and potentially reduce the overall tax liability. However, the transferee will inherit the original acquisition cost of the asset, so any future gain will still be taxable when they sell or dispose of it.

Effective CGT planning involves taking steps to manage the timing and structure of asset disposals. Strategies could include spreading disposals over multiple tax years to make use of annual exemptions, utilising available reliefs, gifting assets to family members, or holding certain investments in tax-efficient wrappers, such as ISAs or pensions, where no CGT is due. Careful planning before making significant disposals is essential to minimise liabilities.