How bespoke portfolio management can help reduce CGT liabilities over time
16 February 2026
Understanding capital gains tax: how IFA clients can reduce liabilities and keep more of their wealth.
Article last updated 18 February 2026.
Managing investments effectively means understanding capital gains tax (CGT) and how planning can help your clients keep more of their wealth. And every pound saved in CGT today could be a pound of compounding toward their wealth tomorrow.
CGT affects anyone who sells investments, property, or valuable assets at a profit. With allowances falling and rules evolving, CGT planning has become an essential part of tax‑efficient investing. This guide explains how CGT works, how it’s calculated, and how bespoke portfolio management can help your clients reduce their CGT liabilities over time.
This information is based on our current understanding of HMRC tax rules in the UK. Tax treatment depends on personal circumstances, which could change.
What is CGT and how is it calculated?
CGT is a tax on the profit when investors sell or give away certain assets (we’ve provided a list below of which assets CGT is applied to). Individuals pay tax on the increase in value, not the total sale price. Some costs of buying and selling can reduce the taxable gain.
Each tax year investors have a tax-free allowance – the Annual Exemption Amount. They only pay CGT on profits above this amount. The annual exempt amount is £3,000 for individuals and personal representatives, and £1,500 for most trustees. This is a reduction from previous years (e.g., £6,000 in 2023/24).
Strategies for reducing CGT
Any reduction in CGT liabilities will increase what’s available to continue compounding the investment returns over the long run. Strategies for minimising CGT fall into several categories:
Use the annual allowance every year
Realising gains annually – rather than accumulating large gains over several years – minimises tax exposure.
Harvest losses proactively
Losses can be used to offset gains either in the same year or future years.
Make the most of tax-efficient wrappers
ISAs, pensions, and government bonds (gilts) all offer different ways of sheltering hard-earned money from tax, including CGT. Gains on money invested in ISAs, pensions, gilts are exempt from CGT, which reduces CGT liabilities.
Consider asset location
Place high-growth assets in ISAs and other tax wrappers; use taxable accounts for lower-growth assets.
Use spousal transfers
Spouses and civil partners can transfer assets between themselves tax free.
Time disposals wisely
Selling near the tax year end allows strategic use of allowances.
Why bespoke portfolio management is so effective
A bespoke portfolio management service can help your clients implement these strategies, while also ensuring that their tax strategy is aligned with the investment strategy – rather than working against it. Here are the ways a bespoke service can help:
Continuous allowance management
A dedicated portfolio manager can ensure allowances are used annually and timed most effectively.
Real-time decision-making
Markets move quickly – having a manager oversee timing reduces tax drag.
Portfolio-wide tax oversight
Clients benefit from integrated planning across wrappers, accounts, and asset classes.
Integrated wealth planning
CGT strategy is aligned with broader goals – from retirement income planning to inheritance strategy.
Adapting to evolving tax rules
With CGT allowances declining and rules shifting frequently, active management ensures the portfolio is continuously optimised.
Which investments are subject to CGT?
Assets typically subject to CGT include:
Shares
Collective investment funds
Investment trusts
ETFs
Land
Additional properties
Valuable possessions (art, jewellery)
Which assets are exempt from CGT?
Some assets are sheltered from CGT entirely:
The primary residence (subject to certain conditions)
Certain personal possessions
UK government bonds (gilts)
Shares held via Venture Capital Trusts and Enterprise Investment Scheme which qualify for disposal relief
Qualifying corporate bonds
Premium bonds
How much CGT is paid?
Once it’s known which assets need to be assessed for CGT, here’s a summary of CGT rates for the 2025/26 tax year and where they apply:
Category
Rate
Basic rate taxpayers
18%
Higher/additional rate taxpayers
24%
Residential property
18% (basic rate); 24% (higher rate)
Business Asset Disposal Relief
14% from Apr 2025; 18% from Apr 2026
Frequently asked questions
Common questions about CGT
The annual exempt amount is £3,000 for individuals and personal representatives, and £1,500 for most trustees. This is a reduction from previous years (e.g., £6,000 in 2023/24).
Use allowances, harvest losses, maximise the benefits of tax wrappers such as ISAs, pensions and offshore bonds, and time disposals across tax years.
Individuals may pay CGT depending on the type of transfer, because HMRC treats many transfers as disposals, making them liable for CGT.
Yes – so-called ‘bed and ISA’ transfers of investments from another account into an ISA count as disposals, so CGT may apply.
Gifts usually count as a disposal for CGT purposes. HMRC treats the asset as if sold it for its full market value. There are exemptions to this rule, such as when investors gift to their spouse or civil partner, a gift is made to a registered charity, or investors use reliefs like Private Residence Relief or Business Asset Disposal Relief.
Yes, indefinitely – provided they are report to HMRC.
CGT is generally payable by 31 January following the end of the tax year in which the disposal occurred.
Reporting and compliance
CGT needs to be reported either through:
Self Assessment
HMRC’s Capital Gains Tax Service
UK Property Reporting Service (for residential property).
In general, records must be kept for at least five years after the 31 January submission deadline.
A final word
CGT is complex – but it doesn’t have to be. A bespoke portfolio can help your clients reduce liabilities today and compound their wealth for tomorrow. Contact us to find out more.
What's next?
To explore how we can support your advice process, please speak to your Rathbones business development director or complete the form below and our dedicated adviser support team will be in touch.
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