HMRC has a growing interest in your investments. Why? To increase its income from Capital Gain Tax.
Capital Gains Tax (CGT) receipts have surged to £24.3bn in 2025/26. This is a huge jump compared to previous years. It’s part of a long-term trend in rising tax collected from investors and asset sales. (HMRC tax receipts May 2026)
Why has this sudden CGT tax grab happened?
The biggest reason is the dramatic cut to the CGT annual allowance. In 2022/23, you could receive £12,300 in capital gains before paying tax. This allowance has been steadily eroded to today’s level of just £3,000.
At the same time, CGT rates increased. Since the Autumn 2024 Budget, many gains are now taxed at 18% for basic-rate taxpayers and 24% for higher-rate taxpayers.
In summary, a smaller allowance and higher rates have resulted in larger tax bills.
‘This change is affecting lots of investors, including those who may be selling assets to find day-to-day business or living costs,’ says Felicity, Accountant Senior at re:accounts Chartered Accountants in Stevenage. ‘However, with proper planning, there are perfectly legitimate ways to reduce, and sometimes avoid, a CGT bill altogether. Don’t panic sell without considering these options!’
Three ways to minimise your capital gains tax bill:
1. Use your annual CGT allowance… every year
Your £3,000 allowance resets every tax year. If you don’t use it, you lose it.
Therefore, timing matters. Rather than selling large investments in one go, spreading disposals across multiple tax years can help reduce tax exposure.
Transfers between spouses are usually exempt from CGT, meaning couples can potentially use two allowances, effectively sheltering £6,000 of gains. This applies married and civil partnership couples.
Losses can help too. If you’ve sold investments at a loss, these can often be offset against gains to reduce the tax due.
2. Maximise investments inside an ISA
This is one of the biggest opportunities that people miss.
Investments held inside an ISA are protected from Capital Gains Tax entirely. Yes, gains are completely tax-free. No CGT or dividend tax. No nasty surprises.
If you already hold investments outside an ISA, a strategy called “Bed & ISA” allows you to gradually move them into the tax-free wrapper over time.
There may be CGT implications during the transfer process, however careful management each year can dramatically reduce future tax bills. It’s a great way of moving money out of the HMRC spotlight, and it’s totally legal.
3. Remember your pension
‘Pensions are a huge help when it comes to tax planning,’ explains Felicity. ‘Investments inside pensions are free from CGT. In addition, pension contributions can help keep your taxable income lower, potentially avoiding a higher tax band where CGT rates increase.’
With income tax thresholds frozen until 2031, more people are finding themselves in higher tax brackets due to “fiscal drag”. This is when inflation and rising wages push taxpayers into higher tax brackets or reduce the real value of their tax-free allowances. The result? You need to pay more tax, but you don’t feel any richer.
What happens now?
CGT planning is no longer something only wealthy investors need to think about. With allowances shrinking and tax rates rising, proactive planning has become essential for anyone with investments, property or business assets.
If you don’t make use of the allowances and options available, HMRC will take tax payments you could have minimised or avoided.
Would you like to minimise your tax payments?
Saving money for our clients is our superpower! Talk to the friendly experts at re:accounts Chartered Accountants. There’s no obligation or cost for an initial discussion … and definitely no tax jargon! Let’s have a chat.
