Capital Gains Tax UK 2026: 7 Hidden Ways to Reduce or Avoid CGT Legally

Capital Gains Tax (CGT) is one of the most misunderstood taxes in the UK — and one of the easiest to overpay if you don’t know the rules.

Thousands of taxpayers pay more than necessary to HM Revenue and Customs simply because they don’t understand how CGT works or how to reduce it legally.

Whether you’re selling property, shares, crypto, or investments, this guide explains exactly how to minimise your CGT bill.

Demystifying CGT

Capital Gains Tax is charged on the profit you make when you sell an asset that has increased in value.

You pay tax on the gain — not the total sale price.

Common assets that trigger CGT include:

• Buy-to-let property

• Shares and investments

• Cryptocurrency

• Second homes

• Business assets

Example: How CGT Works

You buy shares for £10,000

You sell them for £25,000

Your gain = £15,000

Minus allowance = £3,000

Taxable gain = £12,000

Tax owed depends on your income tax band.

What Is Capital Gains Tax?

These strategies are fully legal and widely used.

1. Use Your Annual CGT Allowance

You get £3,000 every tax year.

Spreading asset sales across multiple years can reduce tax significantly.

Example:

Sell half this year

Sell half next year

Use two allowances instead of one

2. Transfer Assets to Your Spouse

Married couples and civil partners can transfer assets tax-free.

This allows you to use both CGT allowances.

Total combined allowance: £6,000

This is one of the most powerful CGT reduction strategies.

3. Use Your ISA Allowance

Investments inside an ISA are completely CGT-free.

ISA allowance: £20,000 per year

Moving investments into ISAs protects future gains.

4. Offset Losses Against Gains

If you sell an asset at a loss, you can use that loss to reduce your taxable gains.

Example:

Gain: £10,000

Loss: £4,000

Taxable gain becomes £6,000

5. Use Pension Contributions

Pension contributions reduce your taxable income.

This can move you into a lower CGT bracket.

Lower income = lower CGT rate.

6. Use Both Tax Years

Selling assets before and after 5 April allows use of two allowances.

This is called tax year planning.

It can halve your CGT bill.

7. Claim Private Residence Relief

If selling your main home, you usually pay no CGT.

This is called Private Residence Relief.

However, second homes and buy-to-let properties do not qualify fully.

7 Legal Ways to Reduce CGT

Capital Gains Tax can take a large portion of your profit — but proper planning can reduce it significantly.

Understanding allowances, timing, and exemptions is the key to minimising tax legally.

The earlier you plan, the more you can save.

👉 CapitalGainsTax.co.uk specialises in accurate, HMRC-compliant Capital Gains Tax calculations and advice — helping you understand what you owe and avoid costly mistakes.

If you’re selling property, shares, or inherited assets, expert support can make a significant difference.

📧 info@capitalgainstax.co.uk

📞 0800 0016 878

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