In her first Budget as chancellor in October 2024, Rachel Reeves announced some important changes to Capital Gains Tax (CGT) that might affect you.
More than a year on from the announcement, we’re seeing the effects of the change reflected in CGT receipts. According to the Office for Budget Responsibility (OBR), forecasts suggest the government will raise £25.5 billion from CGT in 2029/30.
This is a significant increase from 2025/26, when the OBR estimates CGT receipts will be £19.7 billion.
The changes to CGT rules might affect you personally, as you pay more tax than you previously would’ve done when selling assets.
Read on to learn why this is and how you could potentially mitigate CGT in the future.
You may pay Capital Gains Tax on your profits when selling certain assets
If you sell certain assets, you might pay CGT on the profits you make, but there are some complex rules to understand when calculating your tax liability.
Assets that qualify for CGT include:
- Stocks and shares held outside an ISA
- Business assets
- A property that isn’t your main home
- Personal possessions worth more than £6,000 (excluding your car).
Fortunately, you have an Annual Exempt Amount to use each year. This means that, in 2025/26, you can make profits of up to £3,000 before triggering a tax charge.
Any profits that exceed this threshold will be subject to CGT at a rate of:
- 18% for basic-rate taxpayers
- 24% for higher- and additional-rate taxpayers.
When managing your investments and selling stocks and shares, it’s important to consider whether you will pay CGT and how this could eat into your profits.
The Annual Exempt Amount and Capital Gains Tax rates have changed in recent years
Since 2023, there have been several key changes to CGT that could mean you pay more tax than you previously would have done.
The Annual Exempt Amount fell from £12,300 to £6,000 in 2023/24, and then again to £3,000 the following year.
Additionally, during her 2024 Budget, the chancellor announced that the rates of CGT would increase. They rose from 10% to 18% for basic-rate taxpayers and 20% to 24% for higher- and additional-rate taxpayers, effective immediately.
This could make a significant difference to the amount of CGT you pay.
For example, prior to 6 April 2023, if you purchased some non-ISA shares for £5,000 and later sold them for £10,000, you’d make a £5,000 profit. This gain would only have used a portion of your £12,300 Annual Exempt Amount, and provided you made no other gains that year, you wouldn’t have paid CGT.
In comparison, if you made the same transaction in 2025/26, your Annual Exempt Amount would be £3,000, meaning you pay CGT on £2,000 of your gains. As a higher- or additional-rate taxpayer, this could leave you with a bill of £480.
Consequently, it’s more important than ever to understand your potential CGT liability and find ways to mitigate the tax.
3 ways to potentially reduce a Capital Gains Tax bill
1. Take advantage of your ISAs
When you buy and sell investments in a Stocks and Shares ISA, you won’t pay any CGT on the profits you make.
As of 2025/26, you can contribute up to £20,000 a year across all your ISAs. This is an individual allowance too, so couples can pay in £40,000 a year between them.
Using as much of your ISA allowances as possible each year could be an effective way to mitigate CGT.
2. Spread the sale of assets across tax years
Another way to reduce CGT is to spread the sale across several tax years.
Using the previous example, if you sold all the shares in one year, your profits would be £5,000 and you would exceed the Annual Exempt Amount, meaning you trigger a tax charge.
However, if you were to sell half in one tax year and the other half the following tax year, you would only make profits of £2,500 each year. This means that you would stay within your Annual Exempt Amount and, if these were your only gains, wouldn’t pay CGT.
3. Transfer assets to a spouse or civil partner
You can pass assets to a spouse or civil partner without paying CGT. If they later sell the assets, they might trigger a CGT charge, and this is calculated based on the value of the asset when you purchased it, compared with the value when they sell it.
Despite this, transferring assets to a spouse or civil partner to sell could mean that you reduce CGT because they have their own Annual Exempt Amount to use. This means, each year, you could benefit from a total of £6,000 in CGT-free profits between you.
Using these simple methods could significantly reduce the CGT you pay or even prevent a bill altogether.
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Please note
This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
The Financial Conduct Authority does not regulate tax planning.