Making the Most of Your Tax-Free Capital Gains Tax (CGT) Allowance in the UK

As of July 2024, the Capital Gains Tax (CGT) allowance for the financial year 2024 to 2025 is £3,000. Here are a few ideas on how you can enjoy the benefits of this allowance even when you don’t intend to sell your profitable assets.

Exchange Gold/Silver Bars for Gold/Silver Coins

Some of you may have bought gold or silver bars as an investment instead of gold coins, not knowing the tax benefits of the latter. Bullion coins from The Royal Mint are exempt from Capital Gains Tax for UK residents due to their status as legal British currency. By selling precious metal bars amounting to £3,000 or less in profit and using the proceeds to purchase Bullion Coins from The Royal Mint, you get to keep your investment without paying tax on the profit, and remain free of future CGT.

Selling and Repurchasing Stocks and Shares

If you have profitable investments in the stock market and don’t intend to sell them just yet, you can still benefit from this allowance. Sell stocks and shares amounting to £3,000 in profit or less, and then repurchase the same stocks and shares after 31 days or more. By doing so, you lower the amount of future CGT. Some investors may fear that once they sell the assets, the price will rise, and they will have to repurchase them at a higher price. This risk can be mitigated by buying Call Options (upside price insurance) for those financial securities.

Cashing Out at the Right Time

How to cash out your investment in the financial market at a target price and benefit from the CGT allowance for two consecutive years. Sell part of your investment amounting to £3,000 in profit and for a similar quantity of stocks or shares, purchase a Put Options (downside price insurance) that extend into the next financial year. By doing so, you will benefit by selling your investment at an optimum price and making use of the £6,000 CGT allowance.