The last budget introduced an immediate increase to the rate of capital gains tax. The annual allowance for 2025/26 is £3,000. This is deducted from any profit achieved when selling a capital asset. The residual amount is then subject to
- 18% lower rate of capital gains tax (formerly 10%), or
- 24% higher rate (formerly 20%).
The higher rates were introduced to ‘raise revenue to fund public services’ according to Chancellor Rachel Reeves. While the increase in capital gains tax rates will disappoint many people, the UK remains competitive with the higher rate of 24% still lower than France (34%), Germany (25%) and Ireland (33%).
Good news … there are legal ways to minimise, maybe even avoid, capital gains tax.
How to cut down on capital gains tax
Firstly, it’s important to know these items are exempt from capital gains tax:
Anything with a useful life of under 50 years is exempt from CGT, e.g. high-end watches, handbags and … racehorses!- Personal property (known as chattels) sold for under £6,000. So, even if you achieve a profit of over £3,000 when selling your jewellery or art piece, you’ll pay no capital gains tax if your selling price was under £6,000.
- Cars. Most people lose money when they sell a car. This loss cannot be offset against gains when selling other items.
In addition, some investments avoid capital gains tax liability:
ISA investments live in a tax-free wrapper. Invest up to £20,000 in shares within an ISA and any gains achieved when you sell are not subject to capital gains tax.- Spread betting speculates on rising and falling market prices. Spread betting is not taxable as. Technically, you are not buying the shares.
- UK Gilts (treasury stock) are exempt. Gilts are UK government bonds, which are issued to help finance public spending. When you buy one at issue, you’re lending money to the UK government in return for regular interest. The increased value you achieve upon maturity is exempt from capital gains tax.
‘It’s as always lovely to save our clients’ money by minimising their tax liability,’ says Felicity Reader, tax expert and Accounts Senior at re:accounts Chartered Accountants in Stevenage. ‘The crucial point is to make sure any steps you take are legal!’
Would you like to pay less tax? Contact the re:accounts team for a no-obligation chat. Saving money is our superpower. We’d love to help you.
