For a long time, the UK’s Capital Gains Tax (CGT) annual exempt amount sat at £12,300. That was generous enough that most retail investors holding modest portfolios outside a tax wrapper never really had to think about CGT planning. Realised gains were comfortably within the allowance, and the rest of life moved on.
That position has changed. The allowance was cut to £6,000 in April 2023, then to £3,000 in April 2024 — a 75% reduction in two short steps. It has remained at £3,000 since.
For investors holding assets outside ISAs and pensions — and particularly for landlords, business owners holding shares, and HNW individuals with sizeable General Investment Accounts (GIAs) — that change quietly raises the importance of year-by-year CGT planning. This article explains what the allowance does, how it interacts with the rates of CGT, and the steps most often discussed in response.
What the annual exempt amount actually shelters
The annual exempt amount is the portion of capital gains you can realise in a tax year before any CGT is due. In 2025/26 and 2026/27, that figure is £3,000 per individual.
If you realise £8,000 of gains in a tax year, the first £3,000 is tax-free; CGT applies to the remaining £5,000 at whichever rate applies to you.
If you realise no gains in a year, the allowance is lost. It doesn’t roll forward. Use it or lose it.
That last point matters more than it did when the allowance was £12,300. The cost of letting an allowance go unused is now small in absolute terms, but doing it year after year compounds.
CGT rates as they currently stand
Rates have also moved. For non-property gains, basic-rate taxpayers pay 18% and higher- or additional-rate taxpayers pay 24%. Property gains (second homes, buy-to-lets that aren’t your main residence) attract higher rates again. These are the headline figures — there are reliefs that affect specific situations.
The combination of a low allowance and meaningful rates means a few thousand pounds of unsheltered gain can produce a real tax bill — particularly for higher- and additional-rate taxpayers.
Common planning steps people consider
A handful of techniques come up consistently in conversations about managing CGT efficiently. None of them is universally right, and the right combination depends on the individual’s circumstances and tax position.
Bed & ISA
“Bed & ISA” is the process of selling a holding in a General Investment Account, using the proceeds to fund an ISA contribution, and (usually within minutes) buying back equivalent exposure inside the ISA. The result: the holding now sits inside a tax shelter.
The sale itself crystallises any gain on the original GIA holding, which counts against the annual exempt amount. Done deliberately each year — selling enough to use the £3,000 allowance without exceeding it — Bed & ISA can move assets out of the taxable account into the tax shelter steadily over several years.
Spousal transfers
Transfers between spouses and civil partners are no-gain-no-loss for CGT. The receiving spouse takes on the original base cost.
This is a powerful tool when one spouse has fully used their allowance and the other has not. Moving a holding across — and selling from the other side — effectively doubles the household’s annual allowance. It also lets the household choose which side of the marriage the gain lands on for rate purposes, which matters where the spouses are in different tax bands.
Loss harvesting
Realised losses can be offset against realised gains in the same tax year, and unused losses can be carried forward against future gains (provided they’re reported to HMRC in time). For investors with both winning and losing positions, choosing which to realise — and in what order across tax years — can materially reduce the tax due overall.
Timing across tax years
Gains realised on 5 April fall into one tax year. Gains realised on 6 April fall into the next. For investors with planned disposals, the timing decision can split a single gain across two tax-year allowances, effectively doubling the shelter for that disposal.
Bringing the assets into a shelter going forward
The above techniques manage gains on assets already held in a GIA. Going forward, where appropriate, contributing new investment money into an ISA or pension first — rather than into the GIA — keeps future gains inside the tax shelter from day one.
Landlords specifically
The CGT cut bites particularly hard for landlords selling buy-to-let property. Property gains attract higher CGT rates, base costs on long-held properties may be small relative to current value, and the £3,000 allowance does very little against six-figure gains.
For landlords planning a portfolio reduction, the conversation often includes:
- Timing the disposals across tax years.
- Coordinating with a spouse — joint ownership can use two allowances and two rate bands.
- Considering principal private residence (PPR) status for any properties that have been a main home at some point.
- Sequencing the sale alongside pension contributions or other income-shifting steps in the same year.
The right combination depends entirely on the individual landlord’s circumstances.
Where this fits in a wider plan
CGT planning isn’t a one-off event. It’s a small, deliberate piece of annual maintenance that compounds over time. £3,000 a year used efficiently across a working life is a meaningful amount of after-tax wealth that would otherwise have leaked away.
When my authorisation is in place, coordinating that kind of ongoing tax efficiency is one of the conversations I expect to have regularly with private clients. Join the waitlist to be first in line.