Capital Gains Tax Planning Before 5 April 2027: Using a £3,000 Allowance Well

A Shrinking Allowance Makes Planning Matter

The capital gains annual exempt amount is now just £3,000 per person for 2026/27 — a fraction of what it was a few years ago. At the same time, rates have been simplified to 18% within your basic-rate band and 24% above it. The combination means that gains which used to slip under the radar now produce real tax bills.

Good news: capital gains tax is one of the most controllable taxes, because you usually choose when to sell. With a little planning before 5 April 2027, you can legitimately shelter far more of your gains than the headline £3,000 allowance suggests. This guide sets out the key strategies, complete with worked numerical examples based on 2026/27 figures.

UK 2026/27 Rates at a Glance

A few important points flow from this table:

• The allowance is per person and resets each 6 April. It cannot be carried forward, so an unused allowance is permanently lost on 5 April.
• The rate you pay depends on your total taxable income plus the gain, so a large gain can spill from the 18% band into 24%.
• Transfers between spouses and civil partners are free of CGT, which is the foundation of most couple-level planning.
• Residential property gains are taxed at the same 18%/24% rates since April 2024; the old 18%/28% split no longer applies.

Strategy 1: Spread Disposals Across Tax Years

Because the £3,000 allowance refreshes every year, splitting a large disposal across two tax years can double the exemption you use.

Suppose you want to realise a £6,000 gain. Sell it all in one year and £3,000 is taxable, costing £540 (at 18%) to £720 (at 24%). Split it across 5 April:

• Sell half before 5 April 2027 — £3,000 gain, fully covered by this year's allowance.
• Sell the other half after 6 April 2027 — £3,000 gain, covered by next year's allowance.

The result is zero CGT on the full £6,000, simply by straddling the tax-year boundary. For larger holdings, phasing disposals over several years can shelter a substantial gain entirely.

Strategy 2: Use Both Spouses' Allowances

Transfers of assets between spouses or civil partners are exempt from CGT, and each person has their own £3,000 allowance and their own basic-rate band. This opens two savings at once.

Consider a couple where one partner is a higher-rate taxpayer and the other has little income.

1. Double the allowance. Move part of a holding to your partner before sale and you use £6,000 of exemption between you instead of £3,000.
2. Use the lower band. Gains in the hands of the basic-rate partner are taxed at 18% rather than 24% on the slice that fits their basic-rate band.

The transfer must be a genuine, outright gift — the receiving partner becomes the legal owner. Done properly, this is fully legitimate and can save hundreds of pounds on a single disposal.

Strategy 3: Harvest Losses

If you hold investments standing at a loss, realising that loss can offset gains elsewhere and reduce your taxable amount.

• Losses are first set against gains in the same tax year.
• Unused losses can be carried forward indefinitely, but must be claimed (usually via your Self Assessment return) within four years of the end of the relevant tax year.
• Carried-forward losses are used only to bring gains down to the annual exempt amount, not below it — so you always preserve your full £3,000 allowance.

Mind the 30-day rule

You cannot sell an asset to crystallise a loss and buy it straight back. Under the bed-and-breakfasting rules, if you repurchase the same asset within 30 days, the loss is matched against the repurchase and disallowed. To stay invested while harvesting a loss, you can:

• Wait more than 30 days before buying back (accepting market risk in between), or
• Buy a similar but not identical asset (for example a different fund tracking the same index), or
• Repurchase inside an ISA or pension, which sits outside the rule.

Strategy 4: Shelter Gains Inside an ISA

Investments held inside an ISA are entirely free of capital gains tax. The "Bed and ISA" move — selling outside the ISA and immediately buying back inside it — uses up your ISA allowance and crystallises any gain at that point.

By keeping each year's crystallised gain within the £3,000 exempt amount, you can migrate a taxable portfolio into the ISA wrapper over several years with little or no CGT, after which future gains are permanently sheltered. With the £20,000 ISA subscription limit available to each person, a couple can shelter £40,000 of assets per year.

Worked Example

Example 1: Couple combining spousal transfer and year-end split

Tom and Sara jointly own a share portfolio with a £10,000 unrealised gain that they want to cash in. Tom is a higher-rate taxpayer (income £60,000); Sara has spare basic-rate band (income £25,000, giving her £25,270 of remaining basic-rate band).

Step 1 — Spousal transfer (no CGT) Tom transfers half the holding to Sara. The disposal to Sara is treated as a no-gain, no-loss transfer. Sara takes the shares at Tom's original base cost.

Step 2 — Sell before 5 April 2027 Each sells shares representing £3,000 of gain.

Step 3 — Sell after 6 April 2027 Fresh allowances are now available. Each sells their remaining £2,000 of gain.

Total CGT on £10,000 gain: £0. Without planning, Tom would have paid CGT at 24% on £7,000 (the £10,000 gain less one £3,000 allowance) — a bill of £1,680.

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Example 2: Loss harvesting to reduce a gains bill

Rachel has realised a £8,000 gain on selling shares in July 2026. She also holds fund units that stand at a £3,500 loss. She sells the loss-making fund units in March 2027.

Without harvesting the loss, Rachel's taxable gain would have been £5,000 and her bill £900. The loss harvest saves her £630.

Rachel should not buy back the identical fund units within 30 days. She instead purchases a comparable global equity tracker from a different provider, maintaining her market exposure while preserving the loss.

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Example 3: Bed and ISA to shelter future growth

David holds shares worth £23,000 that cost him £20,000, giving an unrealised gain of £3,000. He wants to move them inside his ISA before the value grows further.

• David sells the shares, realising a £3,000 gain — fully covered by his annual exempt amount.
• He immediately subscribes £23,000 to his Stocks and Shares ISA and buys the same shares back inside the wrapper.
• Future gains on those shares — which could be substantial over 10–20 years — are now permanently exempt from CGT.

Note: the Bed and ISA repurchase does not trigger the 30-day rule, because the assets inside the ISA are treated as a separate holding from those outside. David has used his full £20,000 ISA subscription for the year, so any remaining portfolio assets will need to wait until after 6 April 2027.

Common Mistakes to Avoid

1. Letting the allowance expire unused

The £3,000 allowance cannot be stored. If you have unrealised gains of at least £3,000 in your portfolio, consider whether it makes commercial sense to realise some before 5 April 2027. Even if you want to hold the investment long term, a Bed and ISA transfer (sell and buy back inside the ISA) crystallises the gain at the exempt amount with no tax cost and no change to your economic position.

2. Ignoring the basic-rate band calculation

Many investors assume they will pay 18% on any gain, but forget to stack the gain on top of their income. If your salary or pension income already fills your basic-rate band up to £50,270, your entire gain will be taxed at 24%. Use the Capital Gains Tax calculator to model the exact split before you sell.

3. Triggering the 30-day rule accidentally

It is easy to sell an investment to harvest a loss and then buy it back through a regular investment plan or dividend reinvestment scheme within 30 days. Check whether any automated purchasing will fire within the window, and pause it if necessary.

4. Failing to claim losses formally

Capital losses do not automatically appear on your tax record. You must claim them on your Self Assessment return — or, if you do not normally file a return, by writing to HMRC — within four years of the end of the tax year in which the loss arose. Unclaimed losses are wasted; claimed losses can reduce future bills for many years.

5. Assuming a spousal transfer is immediate

A transfer of shares between spouses takes effect when the stock is registered in the recipient's name (for certificated shares) or when the broker completes the re-registration. Allow several weeks for administrative processing, and do not plan the transfer for the final days of the tax year when there may not be enough time.

6. Overlooking residential property's 60-day rule

If you sell a second home or buy-to-let property and a gain arises, you must report and pay CGT within 60 days of completion, not by the normal Self Assessment deadline. Missing this deadline attracts an automatic penalty and interest. Use the income tax and planning calculators to estimate your overall position ahead of any property sale.

Don't Forget Reporting

Even where CGT planning reduces the bill, you may still need to report. For 2026/27, you generally must report and pay CGT through Self Assessment if your total gains exceed four times the annual exempt amount (£12,000) or your total proceeds exceed £50,000. UK residential property gains carry their own 60-day reporting deadline after completion. Keep records of acquisition costs, dates and any transfers between spouses, as HMRC can enquire up to four years after the return filing date — or longer if they suspect fraud or negligence.

Key Takeaways

• The annual exempt amount is £3,000 per person and is lost if unused by 5 April.
• Rates are 18% in the basic band and 24% above it; the gain stacks on top of income, so the rate split needs to be calculated, not assumed.
• Spreading disposals across the 5 April boundary doubles the allowance available over two years.
• Spousal transfers are CGT-free, unlocking a second allowance and potentially a lower rate band.
• Loss harvesting offsets gains pound for pound, but requires careful attention to the 30-day bed-and-breakfasting rule.
• The Bed and ISA move shelters assets permanently once inside the wrapper, with no CGT if the gain is kept within the exempt amount.
• BADR reduces the rate to 18% on up to £1 million of qualifying business gains — valuable for business owners planning an exit.

Estimate your liability and test these strategies with the Capital Gains Tax calculator. For income-related band calculations that affect your CGT rate, the income tax calculator gives a clear picture of how much basic-rate band you have remaining before any disposal.