Capital Gains Tax Planning Before 5 April 2027: Using a £3,000 Allowance Well
With the capital gains annual exempt amount stuck at just £3,000 and rates of 18% and 24%, smart timing matters more than ever. Spreading disposals across tax years, using both spouses' allowances and harvesting losses can save hundreds or thousands. Here is a practical CGT plan for 2026/27.
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.
The Core Numbers for 2026/27
| Item | 2026/27 |
|---|---|
| Annual exempt amount (per person) | £3,000 |
| Rate within basic-rate band | 18% |
| Rate above basic-rate band | 24% |
| Business Asset Disposal Relief rate | 18% |
| Spouse / civil partner transfers | No CGT |
A few important points flow from this table:
- The allowance is per person and resets each 6 April. It cannot be carried forward.
- The rate you pay depends on your total taxable income plus the gain, so a large gain can spill from 18% into 24%.
- Transfers between spouses and civil partners are free of CGT, which is the foundation of most couple-level planning.
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.
- 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.
- 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 tax return) within the time limits.
- Carried-forward losses are used only to bring gains down to the annual exempt amount, not below it - so you preserve your £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.
A Worked Example
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; Sara has spare basic-rate band.
- Tom transfers half the holding to Sara - no CGT on the transfer.
- Before 5 April 2027, each sells £3,000 of gain, covered by their respective allowances. That shelters £6,000.
- After 6 April 2027, they sell the remaining £4,000 of gain, using £6,000 of fresh allowances - again no tax.
By combining spouse transfers with tax-year spreading, the couple pays no capital gains tax on a £10,000 gain that would otherwise have produced a bill of well over £1,000.
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, and UK residential property gains have their own 60-day reporting deadline after completion. Keep records of acquisition costs, dates and any transfers between spouses, as HMRC can ask for them.
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 can push itself into the higher rate.
- Spreading disposals across the 5 April boundary doubles the allowance you use.
- Spouse transfers are CGT-free, unlocking a second allowance and a lower band.
- Loss harvesting offsets gains, but mind the 30-day bed-and-breakfasting rule.
Estimate your liability and test these strategies with the Capital Gains Tax calculator.
Frequently asked questions
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