Capital Gains Tax allowances and how they work

Every individual has an annual Capital Gains Tax exempt amount, below which gains aren't taxed — using it well, rather than losing it each year, is a simple but often overlooked piece of planning.

How the annual exemption works

Gains up to the annual exempt amount in a tax year aren't subject to Capital Gains Tax, but this allowance doesn't carry forward — if you don't use it in a given year, it's gone.

Spreading disposals across tax years

Where practical, splitting the sale of an asset (or a portfolio) across more than one tax year can allow more than one year's exemption to be used, rather than realising a large gain all at once.

Married couples and civil partners

Assets can generally be transferred between spouses or civil partners without triggering a gain, which can allow both people's annual exemptions to be used against a joint disposal.

Our advice

We look at the timing of planned disposals well before they happen, since most of the useful CGT planning depends on decisions made before a sale, not adjustments made afterward.