Capital Gains Tax
What is Capital Gains Tax (CGT)?

Profits made from selling capital you’ve had for more than 1 year are subject to Capital Gains Tax. You may still be liable for CGT even if you’re giving away or trading such assets. However, if you decide to sell these assets in less than a year, you would be subject to regular income tax, which is much greater.

All profits and losses made within a tax year are accumulated together to calculate the CGT.

Now you have a better understanding of CGT and who is responsible for it, here are some tips to help you remain expempt or reduce your capital gains tax bill…

Make the most of the CGT Allowance

An individual’s yearly allowance for capital gains tax in the UK can reach a maximum of £12,300. However, a lot of people mistakenly believe that if they don’t utilise their allowance, it will roll over to the next year.

So, if you’re considering selling your assets, you may carefully employ the annual allowance you’ve been allowed and sell your assets strategically every year.

Give Your Spouse the Asset as a Gift

Assets can be exempted from CGT if you transfer them to your spouse, ( as long as you have also lived with them throughout the tax year). This is a “no loss, no gain” transfer, and the CGT limit for married couples doubles if it is an absolute gift.

Dispose Assets on a Loss

Depending on your yearly income, you will have to pay capital gains tax of 15% or 20% when you sell a secondary property. There are ways to minimise your yearly CGT in this situation, such as selling off non-profitable assets.

Within four years of the transaction, any unused losses declared to HMRC may potentially be utilised to your benefit.

As a result, your CGT will be reduced as a consequence of the lesser profits produced in the year.

Financial Planning for the Future and Long-Term investments

Bonds, jewellery, and collectibles may also be subject to the CGT, in addition to the above mentioned assets. A reduced capital gains tax may be achieved by holding such assets for a long time.

Although, if you’re looking to invest in stocks or shares, this may not be the best choice. But investing in tax-deferred retirement plans is a good alternative. This may also be used to acquire or sell assets without triggering or notifying CGT…


AIT Accountants are here to help if you need advice on lowering your CGT bill, so get in touch to talk to our team at