Most people don’t realise the reach of capital gains tax.
For most of us, it lurks in the background, only emerging when we sell an asset or investment. The capital gains tax (CGT) annual allowance has dropped to £3,000 and the 2025/26 tax rates have increased to 18% (lower rate) and 24% (higher rate). With these figures in mind, it still may surprise you to know over £800 million CGT was paid Sept – Dec 2024. That’s a huge increase of 60% compared with Q4 2023. Wow!
It’s important to know the CGT rules. Then, you can ensure you comply with CGT requirements while minimising your tax liability. It’s good to know some assets and investments are exempt from CGT. Similarly, it’s important to know the reach of CGT … it extends beyond property and stocks and shares. Are you affected?
Three surprising CGT scenarios
1. Selling online
Selling assets on platforms such as eBay or Facebook may incur CGT. This applies if you sell something worth £6,000 or more and make a gain of more than £3,000. Items such as jewellery, antiques and paintings are included. If several assets are sold to the same person, they are valued together for CGT purposes. Anything with a useful life of under 50 years is exempt from CGT.
2. Buying with cryptocurrency
If you buy something with cryptocurrency (crypto), you could be spending assets that have significantly increased in value. This is treated as disposing of them and can, therefore, incur a CGT liability. The same principle applies to passing crypto to another person.
3. Giving or exchanging assets
If you give away an asset, any increase to the asset’s value since you bought it will be considered for CGT. Your annual allowance of £3,000 will apply. Therefore, if you give away assets with gains of over £3,000, there will usually be tax to pay.
No tax is due on the transfer of an asset to a spouse or civil partner. However, should they sell it, their gain will be calculated from the date you acquired it.
Exchanging assets such as second property or types of crypto are also liable for CGT.
Tips for reducing CGT:
Use your allowance
Are you planning to dispose of assets? Plan your timing to make the most of your annual CGT allowance, currently £3,000.
- Offset losses
You can offset any capital losses you make during the tax year against gains. In addition, you may be able to deduct any unused losses from previous tax years.
- Maximise ISA protection
If you have investments outside an ISA, you can use the Bed and ISA process (also known as Share Exchange) to move eligible assets into an ISA. Once in an ISA, you won’t pay tax on either gains or income.
- Plan as a couple
If you’re married or in a civil partnership you can transfer investments into their name without triggering CGT, so you can both take advantage of your allowances.
- Consider a venture capital trust
Venture capital trusts (VCTs) are CGT free however they are also very high risk, so should only be considered as part of a large and diverse portfolio.
‘Clients are often surprised by how many assets are affected by CGT,’ says Felicity Reader, tax expert and Accounts Senior at re:accounts Chartered Accountants in Stevenage. ‘Our role is keeping clients compliant while spotting the opportunities to minimise their tax liability, saving them money.
‘Our advice is bespoke for each individual client, however one tip applies to everyone … keep good records of when you bought assets and their value at that time.’
Are you thinking of selling or transferring assets?
Would you like to minimise your CGT liability?
Talk to the friendly experts at re:accounts. Tax is our specialist area … why pay more than you need to?
