How to Pay Less Capital Gains Tax in 2025

Capital Gains Tax (CGT) is a key consideration when selling assets that have increased in value. This month, we’re tackling one of the most frequently asked questions from our clients: how to reduce CGT liability in 2025.

Capital Gains Tax Allowance for 2024/25

For the 2024/25 tax year, individuals can make up to £3,000 in capital gains before paying CGT—half of the previous year’s allowance. This tax-free amount cannot be carried forward, so it works on a ‘use it or lose it’ basis. If possible, spreading gains across multiple years can help make the most of this exemption.

Capital Gains Tax Rates for 2024/25

Your CGT rate depends on both the type of asset sold and your income tax band:

Selling property
Selling other assets (e.g., shares, antiques, investments)

These rates apply only to the portion of your gains exceeding the annual CGT allowance.

Jointly Owned Assets & Married Couples

If you own assets jointly, both individuals can use their individual CGT allowance, effectively doubling the tax-free threshold. Married couples and civil partners can also transfer assets between each other without triggering CGT at the time of transfer. However, if the asset is later sold, the total gain—including the period before the transfer—will be taxed.

CGT Allowance Overview

Tax Year 2023/24

Individual Allowance: £6,000

Married/Civil Partnership Allowance: £12,000

Tax Year 2024/25

Individual Allowance: £3,000

Married/Civil Partnership Allowance: £6,000

Since unused CGT allowances can’t be carried forward, reviewing your assets before the tax year ends could help reduce your tax bill.

What Profits Are CGT-Free?

Not all asset sales trigger Capital Gains Tax. Some key exemptions include:

Personal assets: Selling your car (unless used for business) or personal possessions worth £6,000 or less, such as antiques and collectibles. Items with a lifespan of less than 50 years, like boats, are also exempt.
Your main home: If you sell your primary residence, CGT usually doesn’t apply. However, if you previously lived in a second home or rental property, you may qualify for partial tax relief.
Gifts & transfers: Assets gifted to a spouse or civil partner are tax-free at the time of transfer, though CGT may apply when they later sell the asset. Gifts to charities are also exempt.
Lottery or betting winnings: Any prize money from betting, lotteries, or football pools is tax-free.

Ways to Reduce Your Capital Gains Tax Bill

There are several ways to minimise your CGT liability:

Use both partners’ allowances: If you’re married or in a civil partnership, transferring assets into joint names before selling can increase your tax-free allowance from £3,000 to £6,000. This must be a genuine gift, not a temporary transfer to reduce tax.
Plan property sales wisely: Unmarried couples can each nominate a different property as their main residence, allowing both to claim CGT relief when selling. However, married couples and civil partners must pick a single primary home for tax purposes.
Sell possessions strategically: If you own valuable antiques, artwork, or collectibles, selling items individually rather than as a set can help. Each item can qualify for the £6,000 tax exemption, reducing CGT liability.
Live in a second property before selling: If you own a second home, living in it as your main residence before selling could qualify you for partial CGT relief.

On A Final Note

With the CGT allowance shrinking and tax rates increasing, careful planning is more important than ever. Whether you’re selling property, investments, or valuable possessions, strategic timing and tax reliefs could significantly reduce your bill.

Want to explore how to lower your tax liability? We’re happy to help—get in touch today!