Capital Gains Tax: What It Is, How It Works, and How to Reduce Your Bill in 2025/26

If you’re selling a property, business, shares, or cryptocurrency, Capital Gains Tax (CGT) can take a significant bite out of your profits—unless you plan ahead.

The 2025/26 tax year brings major changes to CGT, with higher rates and a reduced tax-free allowance. If you don’t structure your finances properly, you’ll be paying more tax than necessary.

How Much Is Capital Gains Tax in 2025/26?

CGT applies to profit made from selling an asset—not the total sale price.

CGT Rates for 2025/26:

CGT Allowance for 2025/26:

• Individuals: £3,000 (down from £6,000 in 2023/24)
• Trusts: £1,500

If you exceed your CGT allowance, you must report your gains and pay within these deadlines:

• Property sales – Report and pay within 60 days
• Other assets (shares, crypto, business sales, valuables, etc.) – Report by 31 January following the tax year

Plan asset sales across tax years to maximise your £3,000 exemption each year.

How to Legally Reduce Your CGT Bill in 2025/26

Most people assume CGT is unavoidable—but with the right planning, you can reduce or eliminate it legally.

1. Transfer Assets to Your Spouse or Civil Partner

• Transfers between spouses are tax-free—so you can double your exemption to £6,000.
• If one partner is in a lower tax bracket, transferring assets to them before selling can cut CGT from 24% to 18%.

Tip: Before selling, check if transferring to your spouse could save tax.

2. Offset Your Capital Gains with Losses

• If you make a loss on an investment or property, you can declare it to HMRC and offset it against your current or future gains.
• Losses must be claimed within 4 years.

Tip: Review your portfolio for underperforming assets before selling profitable ones.

3. Use Your CGT Allowance Every Year (Bed & ISA Strategy)

• Your £3,000 CGT allowance resets every year—it cannot be carried forward.
• Sell enough assets each year to use the full allowance, keeping gains CGT-free.
• Bed & ISA strategy – Sell assets, then rebuy them inside an ISA, permanently shielding future gains from CGT.

Tip: Use ISAs and pensions to permanently remove investments from CGT liability.

4. Claim Principal Private Residence (PPR) Relief on Property Sales

• If you’re selling your main home, you don’t pay CGT—but if you’ve ever rented it out or used it for business, CGT may apply.
• You get relief for the time you lived there, plus the final 9 months of ownership.

Tip: Move into a rental property before selling it to reduce CGT.

5. Use the Enterprise Investment Scheme (EIS) to Defer CGT

• If you reinvest gains into EIS-qualifying startups, you can:
  ✔ Defer CGT until you sell the EIS shares
  ✔ Pay zero CGT on EIS shares held for 3+ years
  ✔ Get 30% income tax relief on new investments

Tip: If you’re selling a business or investment, consider reinvesting in EIS to defer or avoid CGT.

6. Give Assets to Charity to Avoid CGT

• Gifting shares, land, or property to charity eliminates CGT and gives you income tax relief.
• This can also reduce inheritance tax (IHT) if structured properly.

Tip: If planning a major sale, consider gifting some assets to charity to reduce CGT and IHT.

How to Report and Pay CGT in 2025/26

1. Selling Property? Report within 60 days of sale.
2. Selling Shares, Crypto, or Other Assets? Report by 31 January following the tax year.
3. Use HMRC’s Real-Time CGT Reporting Service to pay immediately.

Solution: Avoid penalties by keeping accurate records and reporting on time.

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CGT Is Rising—But You Can Still Keep More of Your Wealth

With CGT rates increasing and allowances decreasing, the impact on your wealth can be substantial—unless you proactively plan ahead.

Whether you're a property investor, business owner, crypto trader, or someone with valuable assets, the key to minimising CGT is using every legal tax relief available.

Let Sidekick Help You Keep More of Your Money

At Sidekick Accounting, we specialise in:

• Structuring your finances to legally reduce CGT
• Optimising property, business, and investment sales for tax efficiency
• Helping you plan ahead so you never overpay tax

Book a free consultation today and let’s build a tax strategy that ensures you pay less and keep more.

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