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 £20,200 of any gain can be tax-free in 2010-11. 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 (£10,100 in 2010-11). 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