Capital gains tax explained Capital gains tax tips

Key tips for keeping your capital gains tax bill as low as possible

  • Keep receipts and records for all assets on which CGT might eventually be due.
  • Husbands and wives and civil partners each have their own CGT allowance. By transferring an asset into your joint names, you can both make use of your tax-free allowance so that up to £21,200 of any gain can be tax-free in 2011-12. But the transfer to your spouse or partner must be a genuine outright gift, so this might not be a suitable strategy if your relationship is in difficulty.
  • Paintings, antiques and other collectibles can be a tax-efficient investment, especially where they are not treated as a set and so can be sold piece by piece with each item qualifying for the £6,000 exemption. 
  • Unmarried partners can each nominate a different home as their main home to get tax relief on both. (Married couples and civil partners must choose just one.)
  • If you live in a property as your main home for a time before letting it out, you can potentially reduce the CGT bill when you eventually sell it. See Capital gains and property.
  • If you immediately sell employee shares that you get through an Save-As-You-Earn share option scheme, company share option scheme or enterprise management incentive scheme, you may have a CGT bill. Consider selling in several tranches, so that each year’s gain is within your annual tax-free allowance (£10,600 in 201-12). See How capital gains are taxed.
  • If you get shares through a Save-As-You-Earn share option scheme or a share incentive plan, you have 90 days to transfer them tax-free to an Isa or pension. Gains when you eventually sell will then be tax free.

For more expert advice on capital gains tax, read the Which? Essential Guide: Tax Handbook 2011/12.

Chartered Institute of Taxation

Which? is grateful for assistance from the Chartered Institute of Taxation in compiling this year's guide. For details of the Institute and its work, see www.tax.org.uk 

More on this...

Which? works for you