How to Reduce Capital Gains Tax UK: 9 Legal Strategies

If you are sitting on a buy-to-let property, a share portfolio, a business or even a crypto holding that has grown in value, the question of how to reduce capital gains tax UK investors and property owners pay is one of the most valuable you can ask. With the annual exempt amount cut to just £3,000, far more gains are now taxable than a few years ago — but there are still many legitimate, legal ways to bring your bill down.

This guide sets out nine practical capital gains tax (CGT) planning strategies, with a worked example showing real savings. Everything here is legal tax planning, not evasion — the difference matters. The aim is to use the allowances, wrappers, reliefs and timing rules that Parliament has deliberately put in place. For a quick estimate of what you might owe, try our free capital gains tax calculator.

Important: rates, allowances and reliefs change at Budgets and other fiscal events. Always confirm the current figures on GOV.UK and take advice before any significant disposal. The examples below are illustrative only.

A quick refresher on CGT rates and the allowance

You pay CGT on the gain (broadly, proceeds minus cost and allowable expenses), not the whole sale price. The first slice — the annual exempt amount — is tax-free. For 2026/27 the rates and allowance are:

Item	2026/27 (check GOV.UK)
Annual exempt amount (individuals)	£3,000
Residential property — basic-rate taxpayer	18%
Residential property — higher-rate taxpayer	24%
Other assets (shares, business, crypto) — basic rate	10%
Other assets — higher rate	20%
Business Asset Disposal Relief	10% on up to £1m lifetime gains

Because the rate you pay depends on whether the gain falls in your basic-rate or higher-rate band, who owns the asset and when you sell it can change the tax dramatically. That is the foundation of most planning below. For more detail see our guides on the CGT allowance 2026/27 and CGT rates and brackets.

1. Use your annual exempt amount every year

The simplest strategy is also the most overlooked: the £3,000 annual exempt amount cannot be carried forward, so an unused allowance is gone for good on 6 April. If you hold investments with unrealised gains, consider crystallising gains up to £3,000 each tax year to use the allowance and reset your base cost higher. Done consistently, this quietly removes a chunk of future taxable gain at no cost.

Be aware of the 30-day “bed and breakfast” rule: you cannot sell shares and simply rebuy the same ones the next day to lock in the allowance. But you can rebuy inside an ISA or pension, or buy a similar (not identical) fund.

2. Transfer assets to your spouse or civil partner

Transfers between spouses and civil partners who live together are treated as no-gain/no-loss — no CGT arises on the transfer itself. This unlocks two powerful effects:

• Two allowances instead of one. Moving half the asset to your spouse before sale lets you use both £3,000 allowances (£6,000 combined).
• A lower rate on part of the gain. If your spouse has unused basic-rate band, their share of the gain may be taxed at 18%/10% rather than 24%/20%.

The transfer must be a genuine, outright gift of beneficial ownership — not a paper exercise reversed after sale. This is one of the most common and effective tactics we see for married couples.

3. Shelter investments in an ISA

Anything held inside a stocks and shares ISA is entirely free of CGT — no tax on growth, no tax on disposal, no reporting. The annual ISA allowance is £20,000 per person (check GOV.UK). Over several years, systematically moving holdings into an ISA — a process often called “Bed and ISA” — converts a taxable portfolio into a CGT-free one. Each Bed and ISA sale uses your annual exempt amount too, so it can be tax-neutral on the way in.

4. Use pension contributions

Pensions are another CGT-free wrapper, and contributions can also extend your basic-rate band. Because a personal pension contribution increases the threshold at which higher-rate tax starts, it can push more of a capital gain into the lower 18%/10% CGT bracket. For higher earners with large gains, a well-timed pension contribution can reduce both income tax and CGT — but annual and lifetime limits apply, so take advice.

5. Offset capital losses

Losses are valuable. Current-year capital losses must be set against current-year gains before the annual exempt amount. Any excess loss can be carried forward indefinitely once claimed. Crucially, brought-forward losses can be used selectively — you only deduct enough to bring the taxable gain down to £3,000, preserving the rest for future years.

If you hold an investment standing at a loss, deliberately realising it (“loss harvesting”) in a year when you have gains can wipe out the tax on those gains. Losses must be claimed within four years of the end of the tax year in which they arose, so do not let them lapse.

6. Spread disposals across tax years

If you can control the timing, splitting a large disposal across two tax years uses two annual exempt amounts and can keep more of the gain in the basic-rate band. Selling part of a share portfolio on 5 April and the rest on 6 April straddles two tax years instantly. For a single indivisible asset like a property this is harder, but staged sales of shares, units or land can make a real difference.

7. Claim Business Asset Disposal Relief or Investors’ Relief

If you are selling all or part of a trading business, or shares in your personal trading company, Business Asset Disposal Relief (BADR) can reduce the CGT rate to 10% on up to £1 million of qualifying lifetime gains (check the current rate and limit on GOV.UK, as both have been subject to change). Strict conditions apply — typically a minimum ownership period and being an officer or employee.

Investors’ Relief offers a similar reduced rate for external investors in unlisted trading companies who subscribe for new shares and hold them for the required period. These reliefs are highly fact-specific — get advice well before you sell.

8. Use Gift Hold-Over Relief

When you give away certain business assets, or transfer assets into or out of some trusts, Gift Hold-Over Relief can defer the gain. Instead of the giver paying CGT now, the gain is “held over” and the recipient takes on the lower base cost, paying tax (if any) when they eventually dispose of the asset. This is useful for passing a business or shares to the next generation without an immediate CGT charge, though it interacts with inheritance tax planning and should be coordinated carefully.

9. Don’t forget Private Residence Relief on your home

Your main home is normally fully exempt from CGT under Private Residence Relief (PRR). The relief can also cover the final period of ownership even after you move out, and there are further reliefs where a property has been let. If you own more than one property, you may be able to nominate which counts as your main residence within a set time limit — a decision with significant CGT consequences. Landlords in particular should plan this carefully; see our page for an accountant for landlords.

Worked example: a spouse transfer that saves £1,050

Priya, a higher-rate taxpayer, plans to sell shares (held outside an ISA) showing a £15,000 gain. Her husband Sam has no other gains this year and has unused basic-rate band. Here is the difference between selling alone and transferring half to Sam first.

Without planning — Priya sells everything (other-asset rate 20%):

Gain                         £15,000
Less: annual allowance        £3,000
                            ---------
Taxable gain                 £12,000
CGT due (£12,000 x 20%)       £2,400

With planning — Priya transfers half to Sam (no-gain/no-loss), then each sells their share:

Each spouse's gain            £7,500
Less: allowance each          £3,000
                            ---------
Taxable gain each             £4,500

Priya (higher rate, 20%)        £900
Sam (basic rate, 10%)           £450
                            ---------
Total CGT due                 £1,350

By using both annual exempt amounts and Sam’s basic-rate band, the couple cuts the bill from £2,400 to £1,350 — a saving of £1,050. If more of Sam’s gain fell in his basic-rate band and Priya transferred a larger share, the saving could be greater still. (Illustrative only — your figures, bands and the rules in force will differ, so confirm on GOV.UK and take advice.)

A note on timing and the rate bands

CGT sits “on top of” your income for rate purposes. That means a gain realised in a year when your income is lower — a sabbatical, a gap between jobs, retirement, or after a large deductible pension contribution — may be taxed partly at the lower 18%/10% rates rather than 24%/20%. Where you have flexibility over when you sell, modelling the gain against your expected income for each year is one of the most reliable ways to reduce the bill.

Reporting deadlines you must not miss

Reducing the tax is only half the job — you also have to report correctly:

• UK residential property: gains must usually be reported and the tax paid within 60 days of completion, separately from your tax return.
• Other assets: report through self assessment by the normal deadlines.

Missing these deadlines triggers penalties and interest that can wipe out the savings from good planning.

Get the planning right before you sell

The single most important point is this: almost every strategy above has to be in place before you dispose of the asset. Once you have exchanged contracts or sold the shares, most of the options — spouse transfers, ISA sheltering, timing across tax years — are off the table. An hour of advice ahead of a significant disposal routinely saves far more than it costs.

We help individuals, landlords, investors and business owners plan disposals, use every available allowance and relief, and meet HMRC’s reporting deadlines. Explore our capital gains tax advice service, estimate your bill with the free CGT calculator, and read our companion guides on the CGT allowance 2026/27 and CGT rates and brackets.

For the official rules, see GOV.UK: capital gains tax. When you are ready to plan a disposal, book a free consultation and we will help you keep more of your gain — legally.