Knowing how to reduce capital gains tax matters more than ever now that the tax-free allowance has shrunk to just £3,000. Capital Gains Tax (CGT) catches more people than before, whether you’re selling a rental property, cashing in shares, or offloading other assets. If you’re an investor, you’re probably also asking how to avoid capital gains tax on shares specifically, since portfolios can trigger a tax bill even when you haven’t touched the money itself. The good news is there are still plenty of legitimate ways to bring your CGT bill down, whatever you’re selling. This guide covers everything you need to know, from the current rates to specific strategies for property and shares.
UK Capital Gains Tax Rates and Allowance for 2026/27
Before diving into strategies, here’s a quick snapshot of where things stand right now:
| Item | 2026/27 Detail |
| Annual Exempt Amount (tax-free allowance) | £3,000 per person |
| Basic rate CGT (all assets) | 18% |
| Higher/additional rate CGT (all assets) | 24% |
| Business Asset Disposal Relief (BADR) | 18% (up from 14% in 2025/26) |
| BADR lifetime limit | £1 million |
| Basic rate Income Tax band | Up to £50,270 total taxable income |
| ISA allowance | £20,000 per year (fully CGT-free) |
Since October 2024, property and shares have been taxed at the same rates — 18% or 24%, depending on your income.
Your CGT rate depends on how much “room” you have left in your basic rate income tax band once your other income is accounted for. Fill that remaining space first at 18%, and anything above it is taxed at 24%.
How to Reduce Capital Gains Tax When Selling a Property
Selling a second home, buy-to-let, or inherited property? If you’re looking to cut your capital gains tax on property, here’s how to legally reduce the bill:
- Claim Private Residence Relief (PRR) – If the property has been your only or main home at any point, you get relief for that period, plus the final 9 months of ownership automatically.
- Deduct all allowable costs – Estate agent fees, solicitor fees, stamp duty paid on purchase, and costs of major improvements (like an extension or new kitchen, not routine repairs) all reduce your taxable gain.
- Offset capital losses – Losses from other asset sales (shares, other property) in the same tax year or carried forward from previous years can be deducted from the gain.
- Transfer part-ownership to your spouse or civil partner before selling – Transfers between spouses are CGT-free, so splitting ownership before the sale lets you use two £3,000 allowances and potentially two basic rate bands instead of one.
- Time the sale around your income – If you expect a lower-income year (redundancy, retirement, or career break), selling then can keep more of the gain in the 18% band rather than 24%.
- Split the disposal across tax years – If it’s a large gain and structurally possible (e.g., selling in stages or completing just either side of 6 April), you can use two years’ worth of allowances.
- Letting relief (in limited cases) – If you let out a property that was previously your main home, some relief may still apply depending on your specific circumstances — this area has been tightened considerably, so check current rules carefully.
- Report and pay on time – UK residential property gains must be reported and paid within 60 days of completion via HMRC’s “Capital Gains Tax on UK property” service, separate from Self Assessment. Missing this triggers penalties on top of the tax itself.
How to Avoid Capital Gains Tax on Shares
If you’re selling shares, funds, or a portfolio, these are the main levers available:
- Use your ISA allowance (“Bed and ISA”) – Sell shares outside an ISA and immediately repurchase them inside a Stocks and Shares ISA, using up to £20,000 of your annual ISA allowance. Future gains inside the ISA are then completely CGT-free.
- Use your pension allowance (“Bed and SIPP”) – A similar trick works with a Self-Invested Personal Pension: selling and rebuying inside a pension shelters future growth and also earns tax relief on the contribution.
- Spread disposals across tax years – Selling part of a holding in March and the rest in April uses two separate £3,000 exemptions instead of one.
- Harvest losses – Sell underperforming shares to crystallise a loss, then offset it against gains elsewhere. You can even sell and buy back a different but similar fund to stay invested (buying back the exact same shares within 30 days doesn’t count for tax purposes — this is the “bed and breakfasting” rule).
- Transfer shares to a spouse or civil partner – This is CGT-free and can double your combined allowance to £6,000, or shift shares to whichever partner pays a lower tax rate.
- Consider EIS, SEIS or VCT investments – These offer Income Tax relief and, in some cases, the ability to defer CGT on other gains by reinvesting proceeds — though they carry higher investment risk and are not suitable for everyone.
- Use Business Asset Disposal Relief where eligible – If you’re selling shares in your own trading company (holding 5% or more and having been an officer or employee for at least two years), gains up to £1 million can be taxed at just 18% instead of the standard rates.
- Gift Hold-Over Relief – Gifting (rather than selling) shares in a trading company can defer the CGT charge until the recipient eventually disposes of them.
How to Reduce Capital Gains Tax on Any Asset: General Strategies
These tips apply no matter what you’re selling:
- Never let your £3,000 allowance go to waste – It doesn’t carry forward, so if you’re planning multiple disposals, spreading them across tax years is often the single easiest way to save tax.
- Double up with your spouse – Combined, a couple has £6,000 of annual allowance and can use both people’s basic rate bands.
- Keep meticulous records – Purchase price, sale price, fees, and improvement costs. Good records mean you claim every deduction you’re entitled to.
- Reduce your taxable income in the disposal year – Larger pension contributions reduce your taxable income, which can push more of your gain into the 18% band rather than the 24%. Each £1,000 of income moved below the higher rate threshold can save up to £60 in CGT.
- Consider gifting to charity – Gifts of shares or property to a registered charity are exempt from CGT entirely.
- Don’t forget losses carry forward indefinitely – If you made a loss years ago and never used it, it can still be offset against gains today as long as it was reported to HMRC.
- Get professional advice for large or complex gains – Business sales, inherited property, or non-UK residency situations all have extra rules (like Overseas Workday Relief) that a specialist can help you navigate.
Quick Reference: CGT Reduction Strategies at a Glance
| Strategy | Best For | Key Benefit |
| Use annual exemption across years | Any large gain | Extra £3,000 tax-free per year |
| Spousal transfer before sale | Couples | Doubles allowance, may lower rate |
| Bed and ISA | Shares/funds | Future gains CGT-free |
| Bed and SIPP | Shares/funds | Shelter growth + pension relief |
| Loss harvesting | Investment portfolios | Directly offsets gains |
| Private Residence Relief | Property that was your home | Removes/reduces gain entirely |
| Business Asset Disposal Relief | Business owners/directors | 18% rate vs 24% |
| Pension contributions | Anyone with taxable income | Shifts gain into 18% band |
| Gift to charity | Any appreciating asset | Full CGT exemption |
How Apex Accountants Can Help With Capital Gains Tax
Capital gains tax planning should begin before you sell, transfer or gift an asset. Apex Accountants can review your circumstances, estimate the potential gain and identify any available reliefs or allowable costs.
Our team can help you with:
- Calculating gains on property, shares and other taxable assets
- Reviewing Private Residence Relief and other property reliefs
- Using capital losses and annual exemptions effectively
- Planning transfers between spouses or civil partners
- Checking eligibility for Business Asset Disposal Relief
- Preparing and submitting accurate CGT reports
- Meeting the 60-day reporting deadline for UK residential property
- Planning the timing of disposals across different tax years
Early advice can reduce costly mistakes and help you make informed decisions before completing a sale.
Frequently Asked Questions About Reducing Capital Gains Tax
Do I have to pay CGT on my main home?
Usually not, thanks to Private Residence Relief, provided it’s been your only or main residence throughout ownership.
Can I carry forward my unused CGT allowance?
No. The £3,000 Annual Exempt Amount is use-it-or-lose-it each tax year.
Is crypto treated the same as shares?
Yes. Crypto disposals, including swapping one coin for another, are taxable events under the same 18%/24% rates.
How long do I have to report property gains?
UK residential property gains must be reported and paid within 60 days of completion, separately from Self Assessment.
How long do I have to report capital gains tax on property?
UK residential property gains must be reported and paid within 60 days of completion, separately from Self Assessment.
Final Thoughts
With the CGT allowance now just a quarter of what it was a few years ago, proactive planning matters more than ever. Whether it’s using both spouses’ allowances, sheltering gains in an ISA or pension, or timing a property sale around a lower-income year, small decisions made before you sell can add up to meaningful savings. If you’re still unsure how to reduce Capital Gains Tax when selling a property or want a strategy tailored to your own portfolio, it’s always worth getting a second opinion before you commit to a disposal. Contact Apex Accountants today to speak with a specialist and make sure you’re not paying a penny more CGT than you need to.
