Using Your CGT Annual Exemption

Key facts

The CGT annual exempt amount is £3,000 for 2026/27.
The exemption is use-it-or-lose-it — it cannot be carried forward.
Each spouse or civil partner has their own £3,000 exemption.
Bed & ISA lets you crystallise gains tax-free and shelter future growth.
Transfers between spouses are on a no gain/no loss basis, allowing you to double the exemption.

The Annual Exemption: Use It or Lose It

Every individual in the UK gets a Capital Gains Tax annual exempt amount (AEA). For 2026/27, this is £3,000. Gains up to this amount in any tax year are completely tax-free. Unlike capital losses, the exemption cannot be carried forward — if you do not use it, it is lost forever.^[1]

Reduced allowance: The AEA was £12,300 for 2022/23, fell to £6,000 for 2023/24, and dropped again to £3,000 from April 2024. This makes planning even more important — £3,000 of gains can be used up quickly.^[2]

Strategies to Use Your Exemption

1. Bed & ISA

This is the most popular strategy for using the annual exemption. The process is straightforward:

Sell investments held outside your ISA to crystallise a gain of up to £3,000
Repurchase the same (or similar) investments inside your ISA
Future growth is now completely tax-free within the ISA wrapper

Example: You hold £15,000 of shares (originally bought for £10,000, so £5,000 unrealised gain). You sell £9,000 worth of shares, crystallising a £3,000 gain — fully covered by your AEA, so no CGT. You repurchase £9,000 of the same shares inside your ISA. Your new base cost outside the ISA is now higher, and £9,000 of your portfolio is sheltered forever.

2. Bed & Pension

The same principle as bed & ISA, but you repurchase inside a pension (SIPP). You also get tax relief on the pension contribution — a double benefit. However, pension funds are locked until age 55 (rising to 57 from April 2028).

3. Spouse Transfers

Transfers between spouses and civil partners are on a no gain/no loss basis. This means you can transfer assets to your spouse, who then has their own £3,000 exemption to use when they sell.^[3]

Strategy	Exemption Used	Tax Saved (at 24%)
Your exemption only	£3,000	£720
Your exemption + spouse’s	£6,000	£1,440
Both + bed & ISA	£6,000 + tax-free growth	£1,440 + ongoing savings

4. Partial Disposals

You do not need to sell an entire holding. You can sell just enough shares or units to use up your £3,000 exemption, keeping the rest of your investment intact.

Timing Considerations

The tax year runs from 6 April to 5 April — plan disposals before the deadline
Allow for settlement periods (T+1 for UK shares) — the disposal date is the trade date, not settlement
If you also have capital losses, these are deducted before the exemption — so losses may “waste” your AEA
Beware the 30-day rule: if you sell and rebuy the same shares within 30 days (outside an ISA/pension), the sale is matched with the repurchase, negating the gain crystallisation

30-day rule: The share matching rules mean that if you sell shares and buy them back within 30 days, the gain is calculated using the repurchase cost. This is why bed & ISA works — the repurchase is in a different tax environment (the ISA) and is not caught by this rule.

Interaction with Capital Losses

Capital losses from the same tax year must be offset against gains before the annual exemption applies. This can waste your exemption. For example:

You make £5,000 of gains and £4,000 of losses in the same year
Net gain: £1,000 — which is below your £3,000 exemption
Result: £2,000 of your exemption is effectively wasted

Where possible, consider timing losses in different years from gains to maximise both the exemption and the carried-forward losses.

Frequently Asked Questions

What is the CGT annual exempt amount?

It is a tax-free allowance that lets you make capital gains of up to £3,000 in each tax year without paying any CGT. It was reduced from £6,000 (2023/24) to £3,000 from April 2024 and remains at £3,000 for 2025/26.

What is bed and ISA?

Bed & ISA involves selling investments held outside a tax wrapper to crystallise a gain (using your annual exemption), then repurchasing the same investments inside an ISA. Future growth is then completely tax-free. Unlike the old “bed & breakfasting” (selling and rebuying the same shares), bed & ISA is not caught by the 30-day matching rule because the repurchase is in a different tax environment.

Can I transfer assets to my spouse to use their exemption?

Yes. Transfers between spouses and civil partners are on a no gain/no loss basis. Your spouse then has their own £3,000 annual exemption when they eventually sell. This effectively doubles the exemption available for the household.

What happens if I do not use my annual exemption?

You lose it. The £3,000 exemption cannot be carried forward to future years. If you have investments with unrealised gains, it is worth considering whether to crystallise up to £3,000 of gain each year.

Sources

Capital Gains Tax: what you pay it on, rates and allowances — GOV.UK
Capital Gains Tax: Annual Exempt Amount — HMRC
Capital Gains Manual: CG22200 – Married couples and civil partners — HMRC