Capital Gains Tax (CGT) exemptions help you reduce or avoid tax when you sell an asset for a profit. These apply to individuals who sell property, shares, business assets or other valuable items. In 2025 several exemptions and reliefs allow you to reduce the CGT legally and stay HMRC compliant.

The CGT system has allowances for all taxpayers, full exemptions for some assets and reduced rates for business and investment gains. Knowing how each one works lets you structure disposals efficiently and avoid tax you don’t need to pay.

This guide covers the 10 key CGT exemptions for the 2025-26 tax year. Each exemption is based on current UK tax law and is for landlords, investors, company owners and individual taxpayers to reduce their capital gains tax.

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Key Takeaways

The CGT annual exempt amount for 2025 is £3,000 per individual
ISAs, pensions, and small personal items are CGT-free
Transfers to spouses and charities are not subject to CGT
Reliefs for business owners and investors reduce CGT to 10%
Timing, records, and advice are key to using exemptions correctly

The 10 Capital Gains Tax Exemptions

Below are the key CGT exemptions that will lower your CGT liabilities to HMRC:

Annual Exempt Amount – £3,000 tax-free gains per person in 2025
ISA and Pension Gains – Profits inside ISAs and pensions are fully CGT-free
Private Residence Relief – Main homes are usually exempt from CGT
Spouse or Civil Partner Transfers – No CGT on transfers between spouses
Business Asset Disposal Relief – 10% CGT rate on qualifying business disposals
Investors’ Relief – 10% CGT rate on shares in unlisted trading companies
Gift Holdover Relief – Defers CGT on certain business and trust gifts
Rollover Relief – Defers CGT when reinvesting in new business assets
Chattels Exemption – No CGT on personal items worth under £6,000
Assets Passed on Death – No CGT when an asset is inherited (step-up in value applies)

10 Key UK Capital Gains Tax (CGT) Exemptions Explained for Pharmacy Directors and owners

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Annual Exempt Amount (2025)

The CGT annual exempt amount allows each individual to earn up to £3,000 in tax-free gains. This is the first level of exemption for anyone disposing of chargeable assets. For trusts, the exemption is reduced to £1,500.

If your total gains for the year stay within this limit, there is no CGT due, and no need to report to this to HMRC unless you’re already within Self Assessment. This exemption resets each tax year on the 05^th of April and cannot be carried forward.

The reduced Capital Gains Tax (CGT) allowance means more taxpayers now fall into the chargeable category, especially landlords, share investors, and small business owners. The tax-free threshold decreased from £12,300 in the 2022-23 tax year to £6,000 in 2023-24, and further down to £3,000 in 2024-25, significantly increasing the number of individuals liable for CGT. The Govt may reduce this again so it’s worth keeping an eye out for this change in allowance in the future.

Gains in ISAs and Pensions

Gains from ISAs and pensions are fully exempt from Capital Gains Tax. Any capital growth from investments held inside a Stocks and Shares ISA or personal, corporate and workplace pension funds (such as a SIPP or Defined schemes) are not subject to CGT when they are winding up a Cash lump sum or being drawn down.

This exemption applies to shares, ETFs, funds, and even crypto where permitted inside a tax wrapper. In 2025, the ISA contribution limit remains at £20,000, and using this allowance each year is one of the most efficient ways to shield long-term growth from tax. Pensions offer further CGT and Inheritance Tax benefits, making them a critical part of financial planning.

Private Residence Relief

Private Residence Relief exempts the sale of your single main home from CGT in most cases. To qualify, you must have lived in the property as your only or primary residence throughout the period of ownership.

The final nine months of ownership are always CGT-free, even if you were not living there at the time of sale.

Letting part of the home or using it for business purposes may reduce the relief on a time apportionment. Second homes and buy-to-let properties do not qualify. HMRC may request numerous evidence of residence, so keeping utility bills, insurances, proof of identification at the address and electoral register records is also advised.

Transfers Between Spouses or Civil Partners

Transfers of assets such as property between spouses or civil partners are exempt from Capital Gains Tax. This exemption allows one partner to transfer assets to the other at no gain and no loss. It is often used to share the annual exempt amount, spread income for tax efficiency, or allow one partner to claim a relief they qualify for.

The exemption only applies if both parties are UK resident and legally married or in a civil partnership at the time of transfer. Timing is key when using this strategy before a planned sale or disposal. It is also useful in scenarios such as where one partner has a lower tax bracket than the other, Also in case of transfer of properties before a divorce proceeding. Also where either party can utilise other exemptions such as the annual allowance or business asset disposal relief amount.

Business Asset Disposal Relief

Business Asset Disposal Relief reduces CGT to 10% on qualifying business disposals. Formerly known as Entrepreneurs’ Relief, this applies to individuals selling all or part of a business, shares in a personal company, or assets used in a business.

The lifetime gains limit is £1 million. If gains are below the £1 million limit these are taxed at the lower 10% rate and Gains above this limit are taxed at 20%. To qualify for business asset disposal relief, you must have owned the business or shares for at least two years and meet other conditions such as being an employee or officer.

This relief is commonly used by sole traders, company directors, Partnerships and retiring business owners. Accurate business valuation is essential when claiming. If Assetts are correctly structured and split between Spouses and then sold there is the possibility of doubling the BADR relief limit from £1 million to £2 million. Giving rise to a possible tax saving of £200,000

Investors’ Relief

Investors’ Relief allows a 10% CGT rate on gains from certain share disposals. This applies to shares in unlisted trading companies acquired on or after 17 March 2016.

To qualify for investors’ relief, the shares must be newly issued, held for at least three years, and disposed of after the holding period. The individual need not be an employee or director. The lifetime gains limit is £10 million. This relief supports long-term investment in UK businesses and is often relevant for angel investors or those involved in the Enterprise Investment Schemes (EIS) or Seed Enterprise Investment Schemes (SEIS) .

Gift Holdover Relief

Gift Holdover Relief defers CGT on certain business-related or trust-linked gifts. If you gift qualifying business assets, or transfer shares into or out of a trust, this relief lets you delay the CGT by passing the gain liability onto a time when the the recipient eventually sells the asset in the future.

There is no tax at the point of the gift as the recipient takes on the original base cost. This strategy is useful for family business succession or trust planning. HMRC requires both parties to complete the relief claim together. It does not apply to gifts of personal-use assets like artwork or jewellery.

Rollover Relief

Rollover Relief allows you to defer CGT when replacing an old business asset with a new business assett. If you sell an eligible business asset and reinvest the proceeds into a new qualifying asset, the gain can be rolled over, meaning no CGT is paid immediately.

The new asset takes on a reduced base cost. The reinvestment must take place within three years before or after the disposal. This relief applies to land, buildings, and fixed plant or machinery used in a business. It is often used by farmers, manufacturers, and landlords operating furnished holiday lets as trading businesses.

Chattels Exemption

Chattels’ exemption applies to personal possessions worth less than £6,000. Items such as antiques, paintings, jewellery, and collectables are exempt if their disposal value is below the threshold. Assets with a useful life of under 50 years, called wasting assets (such as vintage watches or classic cars used regularly), are also CGT-free.

If a chattel is sold for more than £6,000, marginal relief may apply. Items used for business or rented out may not qualify. The chattels exemption encourages private ownership of non-investment personal items without triggering tax.

Assets Passed on Death

Assets passed on after death are not subject to CGT at the point of inheritance. When someone dies, their assets are revalued to their probate market value. The beneficiary who inherits the asset pays no CGT at that time.

Capital Gains Tax may only apply later if the beneficiary sells the asset and makes a gain above the probate value. This rule is called the “step-up in base cost.” While Inheritance Tax may still apply on the estate, CGT is not triggered on death. This is an important consideration in estate and inheritance succession planning.

When Is CGT Not Payable at All?

Capital Gains Tax is not charged on every gain. Certain assets are fully outside the scope of CGT and do not need to be reported. These include gains from ISAs where you can invest up to £20,000 per year, pensions investment growth (such as SIPPs) where you can invest up to £60,000 per year, UK Premium Bonds, National Lottery and gambling winnings, and qualifying government bonds like UK gilts. Profits made inside ISAs or pensions remain completely tax-free, even when withdrawn in the future.

UK gilts and qualifying corporate bonds are also exempt under HMRC rules. Winnings from betting or lotteries are not taxable, regardless of the amount.

Assets that fall outside CGT rules can still form part of Inheritance Tax liabilities , so they should not be overlooked when reviewing a holistic view of wealth and looking at business, IHT, Estates and personal tax planning. Using tax-efficient investment wrappers each year is one of the most effective ways to grow capital without triggering CGT.

Smartly Reduce Capital Gain Tax

Understanding your Capital Gains Tax position can save you thousands — but the rules are complex and easy to miss.

RX Virtual Finance offers a Free Financial Review to help you assess your current tax exposure, identify missed reliefs, and plan future asset disposals with confidence.
Whether you’re selling property, shares, or a business asset, this no-obligation review gives you expert guidance tailored to your situation.

Request a Free Financial Review

Offsetting Capital Losses

If you sell an asset and make a loss, you can use that loss to offset gains from other disposals in the same or future tax years. This reduces your total taxable gain and can bring it below the annual exemption threshold.

To use a loss, you must report it to HMRC, either through your Self Assessment return or by contacting them directly. The deadline to report is four years after the end of the tax year in which the loss occurred. Losses from assets that are not chargeable or exempt do not qualify.

Unused losses can be carried forward indefinitely, but they must be claimed first. If you have multiple gains and losses in a year, the losses are set off automatically against the gains. Accurate tracking of losses is vital for CGT planning.

CGT Reporting Requirements in 2025

If you sell a UK residential property and make a taxable gain, you must report it and pay any CGT due within 60 days of the completion date. This rule applies to second homes both in the UK and other foreign countrieslv including; rental properties, and inherited property not covered by reliefs.

Other disposals, such as uk or foreign shares, cryptocurrency, or business assets, are to be reported through the Self Assessment tax return. The deadline for Self Assessment submission is on the 31^st of January 9months after the end of the tax year at 05^th of April.

HMRC charges interest and penalties if deadlines are missed. For non-UK residents, the 60-day reporting rule applies to all UK property sales, even when no tax is due. You must use HMRC’s digital reporting service for property disposals. Keeping records of purchase dates, valuations, legal fees, and improvement costs is essential for accurate CGT reporting.

RX Virtual Finance provides tax planning, tax filing, submission support, document reviews, and advice on meeting deadlines to avoid fines and interest charges. Ensuring that Pharmacy owners are maximising allowances and staying compliant.

Common CGT Mistakes to Avoid

One frequent error is assuming small profits do not need to be reported. If your total gains exceed the annual CGT exemption which is currently at £3,000, they must be declared, even if each gain is individually small. Another common mistake is assuming that gifts are always tax-free. Gifts to family members or friends who are not your spouses or partners can trigger CGT unless they fall under specific exemptions or reliefs.

Many people forget to claim available reliefs such as Private Residence Relief or Business Asset Disposal Relief, which could reduce the CGT due by thousands and even tens of thousands. Errors also happen when calculating base cost — for example, excluding enhancement costs or ignoring incidental feesAnother common problem that arises is that the Director / Pharmacy Owner my be unaware of allowable reductions to CGT liabilities by not including allowable expenses such as professional fees, stamp duty land taxes and estate agents fees to reduce their liabilities, they again lose thousands in allowances.

Missing deadlines for CGT reporting, especially for property sales, leads to automatic penalties. If you do sell or transfer items liable to CGT its best to consult an expert tax advisor to ensure you report within deadlines.

HMRC increasingly uses data from third parties to identify unreported disposals. RX Virtual Finance helps clients avoid these pitfalls by reviewing asset disposals, applying the correct reliefs, and ensuring timely, accurate reporting to HMRC.

When to Seek Expert Advice on Capital Gain Tax

You should seek expert advice when CGT applies to complex or high-value assets.
This includes selling multiple properties, disposing of business shares, or transferring ownership within a family.

Tax laws around CGT are detailed and change regularly. Mistakes or missed reliefs can result in thousands of pounds in avoidable tax.

Advice is especially important when planning to claim Business Asset Disposal Relief, Gift Holdover Relief, or Rollover Relief. CGT planning also matters for cross-border scenarios where UK residents own overseas property or shares. Understanding how the step-up in base cost applies for inherited assets is another key area where guidance is valuable.
When advising individuals who may reside both in the UK and abroad—and who hold business interests or assets overseas—it is essential to consult the relevant tax treaty guidance. This helps determine where tax liability arises: whether in the UK or in the foreign jurisdiction.

Additionally, whether an individual is domiciled and/or resident in the UK or the foreign country must also be taken into account, as this significantly impacts tax obligations.

Our tax specialists at RX Virtual Finance can help you navigate these complexities with clarity and confidence.RX Virtual Finance provides tailored CGT advice that considers all income sources, existing allowances, and disposal timing. The team helps clients minimise tax exposure, avoid reporting errors, and structure their affairs correctly before making major asset decisions. With professional support, you can protect more of your gains and stay compliant with HMRC rules.

Capital Gains Tax Case Study – Mrs M Howells, Cardiff

Mrs M Howells approached Buhir Rafiq in Cardiff. One of her concerns was to declare Capital Gains Tax on two private residences and growing uncertainty over penalties.

Buhir’s expert support included:

Filing all CGT tax returns, restoring full HMRC compliance.
Applying Private Residence Relief, time apportionment & allowable expenses to reduce CGT by £8,400+.
Identifying a £9,000 SDLT solicitor error and successfully recovering it through advice from our team of chartered tax advisors and a written appeal.

Mrs Howells described the outcome as ‘a huge weight lifted’. With over £17,400 saved and full compliance achieved, she now feels confident and supported that her tax affairs are correct and up to date.

FAQs

What is the Capital Gains Tax allowance for 2025?

The Capital Gains Tax (CGT) annual exempt amount for individuals in 2025 is £3,000. This is the total amount of gain you can realise in a tax year before CGT is applied. For most trusts, the exemption is reduced to £1,500. If your total gains for the year are below the exemption limit, you do not pay any CGT. This allowance is separate from your personal income tax allowance and resets each tax year. Gains above the exemption are taxed at either 10% or 20%, depending on your income and the type of asset.

Is my main home exempt from Capital Gains Tax?

Your main home is exempt from CGT if it qualifies for Private Residence Relief. To be fully exempt, the property must have been your only or primary residence for the entire period of ownership. The final nine months of ownership are also exempt, even if you moved out before selling. If part of the property was used for business or rented out, partial CGT may apply. Second homes and investment properties do not qualify for this relief. HMRC may request evidence of residence, such as council tax records or utility bills.

Do I pay Capital Gains Tax when I sell shares?

You may pay Capital Gains Tax when you sell shares if your total gains exceed the £3,000 annual exemption. CGT applies to shares held outside of tax-wrapped accounts such as ISAs or pensions. You must calculate your gain by deducting the original purchase price and allowable costs from the sale proceeds. The rate is 10% for basic rate taxpayers and 20% for higher or additional rate taxpayers. You must report the gain via Self Assessment if it exceeds the threshold or if total proceeds are above four times the annual exemption.

Are gifts subject to Capital Gains Tax in the UK?title 4

Gifts are subject to Capital Gains Tax if the asset increases in value and is given to someone other than your spouse or a charity. The gain is calculated using the market value at the time of the gift, not the amount paid or received. Gifts to spouses and civil partners are exempt under the no gain, no loss rule. Certain business-related gifts may qualify for Gift Holdover Relief, which defers the tax until the recipient disposes of the asset. All other gifts may trigger CGT and must be reported to HMRC.

How do I report Capital Gains Tax to HMRC?

You report Capital Gains Tax to HMRC through one of two methods. For UK residential property disposals with CGT due, you must report and pay the tax within 60 days of completion using HMRC’s digital property reporting service. All other gains, such as shares or business assets, are reported on your Self Assessment tax return by 31 January following the tax year. If you are not registered for Self Assessment, you must inform HMRC and request access. Late filing or payment leads to automatic penalties and daily interest charges.

Can I reduce Capital Gains Tax by using losses?

Yes, you can reduce your CGT bill by offsetting capital losses against your gains. Losses must be reported to HMRC within four years of the end of the tax year in which they occurred. If you have more losses than gains, the excess can be carried forward to future years. Losses are deducted before the annual exemption is applied. You cannot use losses to increase the annual exemption or create a tax refund. RX Virtual Finance helps clients track, report, and apply losses in the most tax-efficient way.