Just a few months into the new tax year, and already we’re seeing a different landscape – one where familiar tactics may now leave you exposed. If you’re sitting on investments outside of ISAs or pensions, or haven’t reviewed your portfolio since April, this might be your early warning.
CGT changes are biting. Exemptions are shrinking. And the tax net? It’s creeping wider. But with the right steps now, you can stay firmly in control.
The Capital Gains Tax Trap: What’s Changed?
Let’s start with the facts:
- From October 2024, the main CGT rates rose to:
- 18% for basic-rate taxpayers
- 24% for higher-rate taxpayers
- The annual CGT allowance remains frozen at £3,000 – a sharp drop from £12,300 in the 2022/23 tax year.
That means even modest gains on funds, shares, second homes, or business assets could now attract a sizeable tax bill.
And for entrepreneurs:
- The Business Asset Disposal Relief rate is climbing to 14% from April 2025, and 18% from April 2026
The goal? Raise £18 billion over five years – mainly from the ‘accidental’ taxpayers who never expected to be caught in the CGT net.
Why It Matters Now – Not in March
Here’s what most people miss: tax planning isn’t just for year-end. Acting now gives you options. You’re not rushed, you’re not reacting to market swings, and you can phase gains or income throughout the year – far more effective than panic-selling in February.
Early planning means:
- More control over when and how gains are realised
- Greater use of both spouses’ allowances
- Time to strategically move assets into shelters like ISAs or pensions
Your Three-Pronged Defence
There are ways to fight back, and these three strategies could make a significant difference:
Shelter
Maximise your use of tax-efficient wrappers:
- ISAs – £20,000 annual limit; growth is tax-free
- Pensions – Up to £60,000 a year (subject to income); contributions come with tax relief and shelter growth from tax
Pro tip: Prioritise wrapping high-growth investments, such as equity funds, inside these wrappers.
Shift
Review your unwrapped investments. Can you:
- Realise gains now while they’re manageable?
- Use the opportunity to rebalance or restructure more tax-efficiently?
Early in the tax year is a great time to act – no year-end deadline pressure.
Split
If you’re married or in a civil partnership:
- Transfer assets to your spouse to make use of both CGT exemptions
- Lower-income partners may pay tax at a lower rate, which could reduce your overall bill
Quick Wins Before the Autumn Rush
Acting early in the tax year means you have more flexibility. You’re not racing against a March deadline, and any gains you realise now could be offset later if markets shift.
It also gives your adviser time to map out a clearer strategy for using allowances, managing income, and reducing exposure across the board.
Keep an Eye on the Bigger Picture
This year’s tax shifts are part of a broader trend:
- Tighter rules on business relief and inheritance planning
- Ongoing cuts to dividend and savings allowances
- A heavier focus on taxing wealth held outside of pensions and ISAs
It’s never been more important to have a joined-up strategy – not just tax-efficient investing, but income planning, legacy planning, and protection all working together.
Real Wealth Is What You Keep
Your account balance might look good on paper. But if you’re losing out to tax (and inflation, and fees), it’s the real-world return that counts. If you haven’t yet updated your wealth strategy to reflect 2025’s tax environment, you might be missing opportunities to hold onto more.
To find out whether your portfolio is structured as efficiently as it could be, book a review with one of our advisers today.
We’ll help you:
- Identify tax risks in your current portfolio
- Make the most of available allowances
- Restructure investments where appropriate
📞 020 8366 4400
📧 enquiries@cedarhfs.co.uk
This article is for information purposes only and should not be considered personal advice. The information is based on our understanding of current legislation and may be subject to change.
Capital is at risk. Tax treatment depends on individual circumstances and may be subject to change in the future.
If you are unsure about the suitability of a financial product or investment for your needs, please seek regulated financial advice.