When to Sell Investments in the UK: Using Your £3,000 CGT Allowance

Why the CGT annual exempt amount matters more than ever

The CGT annual exempt amount has been cut dramatically. In 2022/23 it stood at £12,300 — allowing most modest investors to sell significant portfolios without any CGT exposure. By 2024/25 it had been cut to £3,000, a reduction of over 75%, and it has remained there since.

The practical effect: an investor with a portfolio showing, say, £20,000 of unrealised gains who previously could take time to crystallise those gains in chunks under the generous AEA now faces a much tighter annual window.

At £3,000 of gains per year and a higher-rate CGT rate of 24%, the cost of failing to use your AEA annually is £720 per year — for every year you let the allowance expire unused.

The core principle: crystallise gains annually

The simplest CGT planning strategy is to crystallise up to £3,000 of gains each tax year, staying within the AEA. This means selling assets with unrealised gains, ideally just before 5 April, and either:

• Rebuying the same assets (if you want to retain the position) — there is no 30-day CGT rule for simply rebuying the same shares outside an ISA (the 30-day "bed-and-breakfast" rule is unchanged but applies to buying back before selling, not after)
• Rebuying inside an ISA (the "bed-and-ISA" strategy — see below)
• Taking the cash

The maths of annual crystallisation (higher-rate taxpayer):

Investor holds £40,000 of shares with a £12,000 unrealised gain.

By spreading the crystallisation over four years, the entire gain is sheltered within the AEA — saving £2,160 in CGT. The only action required is to sell in March or early April each year and rebuy.

Important: the AEA cannot be carried forward. An unused allowance in 2025/26 is lost on 5 April 2026. There is no mechanism to combine two years' worth of allowances.

Bed-and-ISA: the most powerful tool for share investors

The bed-and-ISA strategy is particularly effective because it permanently shelters assets from future capital gains (and income from dividends) — not just for the current year.

How bed-and-ISA works:

1. You hold shares or funds in a general investment account (GIA) with unrealised gains.
2. You sell the holding in the GIA — this crystallises the gain.
3. If the gain is below £3,000, no CGT is due.
4. You immediately (same day, or very shortly after) buy the same shares inside your ISA using the proceeds.
5. Future growth and income inside the ISA is tax-free permanently.

There is no 30-day waiting period for the ISA rebuy. The 30-day anti-avoidance rule (sometimes called "bed-and-breakfast") applies to a different scenario: selling outside an ISA and buying back outside the ISA within 30 days. Selling GIA → buying ISA does not trigger this rule.

ISA allowance constraint: you can only subscribe up to £20,000 into ISAs in a single tax year. If you've already contributed to your ISA this year, your remaining capacity limits how much you can bed-and-ISA. The full £20,000 can be used for this purpose if you haven't contributed yet — meaning up to £20,000 of shares could theoretically be moved into an ISA in a single tax year.

Worked example: Bed-and-ISA on an investment fund

Sarah holds £18,000 of a global index fund in a dealing account. Her original investment was £12,000, so she has an unrealised gain of £6,000.

She uses the following approach over two tax years (straddling 5 April):

Year 1 (March 2026): Sells £9,000 of the fund. Gain = £9,000 × (£6,000 / £18,000) = £3,000. CGT due = £0 (fully within AEA). Rebuys £9,000 of the same fund inside her Stocks and Shares ISA. ISA space used: £9,000.

Year 2 (April 2026): Sells remaining £9,000 of the fund (new ISA year, fresh £20,000 allowance). Gain = £9,000 × (£3,000 remaining gain / £9,000) = £3,000. CGT due = £0. Rebuys £9,000 inside her ISA. ISA space used: £9,000.

Result: £18,000 of investments (including £6,000 gain) moved into the ISA over two tax years, zero CGT paid, and future growth and dividends permanently sheltered.

Spouse transfers: doubling the effective exemption

Assets transferred between spouses and civil partners who are living together are transferred at "no gain, no loss" — meaning no CGT is triggered, but the receiving spouse takes on your original acquisition cost (not the current market value).

Strategy: transfer appreciated assets to a spouse who has not yet used their AEA, so they can sell and use their own £3,000 exempt amount.

Worked example: spouse transfer

Tom holds shares worth £25,000 bought for £19,000 — an unrealised gain of £6,000. His wife Rachel has no investments and her AEA is unused.

Tom transfers half the shares (£12,500, with £3,000 gain) to Rachel. This is a no-gain, no-loss transfer — no CGT for Tom. Rachel now holds £12,500 of shares with Tom's original cost base of £9,500.

Rachel sells her shares: gain = £3,000. CGT due = £0 (within her AEA). Tom sells his remaining shares: gain = £3,000. CGT due = £0 (within his AEA).

Combined, the couple have sheltered the full £6,000 gain across both AEAs in a single tax year.

Additional benefit: if Rachel is a basic-rate taxpayer and Tom is a higher-rate taxpayer, any gains above the AEA would be taxed at 18% for Rachel vs 24% for Tom — so the transfer saves tax even where gains exceed both AEAs.

Loss harvesting: offsetting gains with losses

Capital losses can be set against capital gains in the same tax year, reducing or eliminating the CGT liability. Losses above the AEA can be carried forward indefinitely against future gains.

Rules:

• Losses must be reported to HMRC to be usable — they don't automatically appear
• Losses on assets sold to a "connected person" (spouse, close relative, company you control) cannot be set against third-party gains in the normal way
• Losses cannot be set against gains within the AEA — they reduce gains above the AEA first

Worked example: loss harvesting before 5 April

Marcus has the following position on 31 March 2026:

If Marcus does nothing: net gain of £2,700 — within the £3,000 AEA, so zero CGT.

If Marcus sells Fund B to crystallise the loss: the loss is recorded for future years. But actually, since his net is £2,700 (below AEA), he doesn't need to sell for loss harvesting purposes.

Revised scenario: Fund A shows +£5,500 (above AEA), Fund B −£1,800.

Now crystallising Fund B's loss reduces the gain to £3,700. After AEA of £3,000: taxable gain = £700. At 24% (higher rate): CGT = £168. Without crystallising Fund B: taxable gain = £2,500, CGT = £600. Saving from loss harvest: £432.

Timing: sell before 5 April vs after

The UK tax year ends on 5 April. Gains realised on or before 5 April fall in the current tax year; gains realised on or after 6 April fall in the next.

Reasons to sell before 5 April:

• You have AEA remaining in the current year but have already used next year's (if you know you'll be selling other assets next year)
• You expect your income to fall next year (and want the gain taxed at 18% vs 24% — basic rate vs higher rate)
• You need the cash before the year end

Reasons to sell after 5 April:

• You've already used your current year's AEA
• A fresh AEA of £3,000 becomes available on 6 April
• You have losses from earlier in the year to carry forward

Settlement period warning: share trades typically settle in T+1 (one business day). To ensure a sale before 5 April is treated as that tax year's disposal, the trade date (not settlement date) is what matters — but confirm this with your broker. In practice, trade on 4 April at the latest to be safe.

Shares vs property: the 60-day CGT reporting rule

Residential property disposals (including second homes and buy-to-let properties) are subject to a separate, more urgent set of rules:

• 60-day reporting and payment: from 27 October 2021, UK residents disposing of UK residential property must report the gain and pay any CGT due within 60 days of completion — not at the following January self-assessment deadline.
• 30 days for non-UK residents (different, earlier rule).
• This applies even if the total gain is within the AEA and no CGT is due — the report is still required if proceeds exceed £50,000.

The annual crystallisation strategy discussed above applies to investment assets (shares, funds, most other capital assets). Property gains must be handled much more carefully — you cannot batch them up across tax years in the same way.

CGT rates on residential property: 18% (basic rate) and 24% (higher rate) — aligned with investment rates since the October 2024 Budget.

Practical steps for 2026/27

1. Check your unrealised gains in your dealing account/brokerage now. Most platforms show the "gain" column.
2. Use the AEA early in the year — there's no benefit to waiting until March, and you avoid the year-end rush where platforms may have settlement delays.
3. Open a Stocks and Shares ISA if you haven't already — bed-and-ISA requires an ISA to rebuy into.
4. Review your spouse's position — are they also holding appreciated assets with unused AEA? Coordinate.
5. Record losses — any losses from previous years that weren't reported can be claimed for up to four years after the tax year end (so 2022/23 losses can be claimed until 5 April 2027).

Sources

• HMRC: Capital Gains Tax rates and allowances
• HMRC: Report and pay your Capital Gains Tax
• HMRC: CG-HS10: Share Identification Rules — the 30 day rule
• HM Treasury: Autumn Budget 2024 — Capital Gains Tax changes
• HMRC: Bed and breakfast share transactions (CG13370)