How to Reduce Capital Gains Tax in the UK (2026/27): 8 Legal Ways

Capital Gains Tax (CGT) is charged when you sell or dispose of an asset that has risen in value — shares, a second property, crypto, or a business. For 2026/27 the rates are 18% for gains falling within the basic-rate band and 24% for gains in the higher-rate band, and the tax-free annual exempt amount has been cut to just £3,000. With the allowance a fraction of what it was a few years ago, more ordinary investors now face a bill. The good news is that there are plenty of entirely legal ways to reduce what you owe. Here are eight, all recognised by HMRC.

Want a quick figure first? Our free UK capital gains tax calculator shows your estimated bill in seconds before you plan around it.

1. Use your annual exempt amount every year

Everyone gets a CGT allowance of £3,000 per tax year. Gains below this are tax-free, and crucially the allowance cannot be carried forward — if you don't use it, you lose it. If you hold a portfolio that has grown, consider crystallising gains up to £3,000 each year rather than realising one large gain that pushes you over the limit.

2. Use a Stocks & Shares ISA (and "Bed and ISA")

Gains made inside an ISA are completely free of CGT. You can shelter up to £20,000 a year. A popular move called "Bed and ISA" involves selling shares held outside an ISA — ideally keeping the gain within your £3,000 allowance — and immediately buying them back inside your ISA. All future growth is then protected from CGT for good.

3. Transfer assets to your spouse or civil partner

Transfers between spouses and civil partners are made on a "no gain, no loss" basis, meaning no CGT is due on the transfer itself. This effectively gives a couple two £3,000 allowances — £6,000 of tax-free gains. If one partner pays a lower rate of tax, moving an asset to them before sale can also cut the rate applied to the gain from 24% to 18%.

4. Offset your capital losses

If you have sold other assets at a loss, you can deduct those losses from your gains in the same tax year. Unused losses can be carried forward indefinitely, provided you report them to HMRC within four years. Reviewing your portfolio for losing positions before the 5 April year end is a simple way to bring a gain back under the threshold.

5. Contribute to a pension

Investments held in a SIPP or workplace pension grow free of CGT. Separately, making a personal pension contribution extends your basic-rate band, so more of your gain can be taxed at 18% rather than 24%. With an annual allowance of up to £60,000 for most people, pensions are one of the most powerful planning tools available.

6. Spread disposals across two tax years

Because the £3,000 allowance resets each 5 April, selling part of a holding in March and the rest in April lets you use two years' worth of allowances. For larger gains, spreading the disposal can also keep more of the gain inside the basic-rate band, lowering the rate you pay.

7. Claim the reliefs you are entitled to

Private Residence Relief can wipe out CGT on the sale of your main home entirely. Business Asset Disposal Relief (formerly Entrepreneurs' Relief) can reduce the rate on qualifying business sales to 14% for 2026/27, up to a £1 million lifetime limit. Gift Hold-Over Relief can defer a gain when you give away business assets. Each has strict conditions, so check the rules carefully.

8. Consider EIS, SEIS and VCT investments

The Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) let you defer or, after the qualifying period, eliminate CGT on reinvested gains, while gains on Venture Capital Trust (VCT) shares are tax-free. These are higher-risk investments aimed at experienced investors, so take advice before committing.

A quick word on "avoiding" CGT

Everything above is legitimate tax planning — using allowances, reliefs and tax-free wrappers that Parliament created on purpose. That is very different from tax evasion, which is illegal. If you are unsure, speak to a qualified tax adviser or read the official HMRC Capital Gains Tax guidance.

Work out your bill first

Before you plan, it helps to know the number you are working with. Use our shares CGT calculator or property CGT calculator to estimate your liability for 2026/27, then apply the strategies above to bring it down.

This guide is for general information only and does not constitute financial or tax advice. Figures are correct for the 2026/27 UK tax year at the time of writing.