CGT bills soar 70%: five ways to keep yours down

Increases to capital gains tax (CGT) rates, coupled with a massive reduction to tax-free allowances, are truly starting to take a toll on investors, with receipts soaring by 69% in January 2026.

In the first month of the new year, CGT payments totalled close to £17 billion, up from a little over £10 billion in January 2025.

Between February 2025 and January 2026, meanwhile, the total CGT take was £20.6 billion, a 44% increase on the same period in the previous year (January – when people pay their self-assessment tax bills – is always a big month for CGT).

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What’s happened to CGT?

In recent years, CGT has been subject to some pretty brutal changes.

In 2023, the tax-free allowance (or annual exempt amount as it’s officially known) stood at £12,300 a year. Now, after successive cuts, it stands at a paltry £3,000.

That means CGT is no longer just a tax on the wealthy. Even investors with relatively small holdings that they’ve held for years could face a bill when they eventually come to sell.

Not only has the annual exemption shrunk, but the headline rates of CGT have also risen.

In Labour’s first Budget since coming into power on 30 October 2024, Chancellor Rachel Reeves announced an immediate increase from 10% to 18% for basic-rate taxpayers and 20% to 24% for those who pay higher-rate tax.

The CGT dilemma

CGT can put investors with taxable investments in a tricky position: you may have a plan for that money, but the prospect of a big tax bill puts you off using it.

Until the recent jump in receipts, it had looked like the CGT changes were resulting in behavioural changes among investors, who were choosing to delay sales to avoid paying a tax charge. But latest figures highlight that holding off selling inevitably won’t be an option for every investor.

CGT doesn’t have to make your wealth feel inaccessible, however. Nor does it mean you need to graciously wave goodbye to a significant chunk of your growth.

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Despite the swingeing cuts to the allowance, if you at least know that you’ve got a liability bubbling away, there’s much you can do to trim your bill, or potentially avoid one altogether.

The key is to identify the problem and plan ahead. Here are five things to consider.

1) Maximise stocks & shares ISAs

The easiest way to avoid paying CGT is to invest in a stocks & shares individual savings account (ISA). Each year, you can pay in up to £20,000 and all gains will be tax-free.

But even if you hold investments outside an ISA – for example shares in a trading or general investment account (GIA) – you may still be able to bring them into the fold.

‘Bed and ISA’, is a process that lets you sell investments and then immediately rebuy them within a stocks & shares ISA.

This means your money will be protected from tax in the future and you bypass the 30-day rule (which prevents you selling shares to realise a gain and then buying them back within a brief time frame).

You just need to make sure:

• You have enough ISA allowance remaining for the current year
• Your trading account and ISA are on the same platform (you may need to switch providers)
• You don’t trigger a capital gain by selling holdings that will make you breach your £3,000 CGT allowance for the year

If you’ve got significant sums outside an ISA, you may need to stagger Bed & ISA transfers across multiple tax years to avoid a CGT bill. For example, you could do one before the end of this tax year (5 April) and another as soon as the new one starts (from 6 April).

2) Consider topping up your pension

Another way to shelter investments from tax is to move them into your pension. Most people can pay 100% of their income, up to £60,000, into pensions and get tax relief on contributions.

If you pay it into a pension, you’ll get tax relief on contributions, but your income will be taxable (aside from your 25% tax-free cash). You also won’t be able to access the money until you’re 55 (rising to 57 in 2028).

There will be no tax relief on contributions with an ISA, but all withdrawals will be tax-free, and you can access your money whenever you want.

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What’s best for you will depend on how close you are to retirement and what you eventually plan to do with the money.

3) Use your annual allowance – every year

Each year you can enjoy gains of £3,000 before CGT becomes payable, but you only get to use your allowance when you sell. That means if you sell an investment that you’ve left untouched for 20 years, you’ll only be able to use one year’s worth of allowance, if you sell it in one go.

However, it’s possible to reduce the amount of CGT that will eventually be payable by using your allowance every year. You can do this by selling gains up to your remaining allowance.

That doesn’t necessarily mean you need to stop investing that money altogether. If you have enough allowance remaining, you can use a Bed & ISA. If that’s not an option, or you don’t want to tie investments up in your pension, you can invest elsewhere.

You can’t sell investments and immediately buy them back to realise gains, as you would breach the 30-day rule. But what you can do is buy an equivalent investment, or use it as an opportunity to rebalance your portfolio or add some diversification with something altogether different.

4) Work as a couple

If you’re married or in a civil partnership, you can also work together to minimise your tax bill. This is because you can transfer assets between you, without incurring a tax charge.

A good starting point is to ensure you are using both sets of ISA allowance (you can effectively double up your ISA allowance and invest up to £40,000 between you).

You can also pay into a partner’s pension, whether you are married or not. Even if they don’t pay tax, you can contribute up to £2,880 into their pension, which will boosted to £3,600 once tax relief is added.

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For investments outside tax wrappers, you may also decide to split assets between you, so you can both take advantage of your annual CGT allowance. Alternatively, where a tax bill is unavoidable, savings can be made by transferring assets to a spouse if they pay a lower rate of tax than you.

Just be aware that if you give money to your spouse, it will become theirs, legally. That shouldn’t be a problem if you have joint goals, but worth bearing in mind.

5) Use your losses

You might still be kicking yourself over an investment that didn’t pay off, but previous losses shouldn’t be buried (as much as you might want to banish the memory). Instead, they should be lodged with HMRC.

An often-overlooked part of CGT planning is that you can offset any losses that you have incurred against your capital gains, reducing the total amount of tax that you need to pay.

The losses don’t need to have been suffered in the current tax year either. You can go back to previous years - you just need to make sure that they were reported to HMRC within the required four-year window and that they haven’t been offset against capital gains before.