How to Avoid Capital Gains Tax: Legally and Effectively
With rises to Capital Gains Tax (CGT) rates and allowances shrinking, more investors and individuals are asking a vital question: how can you legally avoid Capital Gains Tax in the UK?
As of 2025, higher-rate taxpayers now face CGT rates of up to 24%, and the Annual Exempt Amount (AEA), the tax-free allowance for capital gains, has been slashed from £12,300 to just £3,000. But while the tax burden grows, there are still several legal strategies that can help you avoid Capital Gains Tax.
Here are five tax-efficient ways to reduce or completely avoid CGT on certain investments and asset disposals.
Published by Alexander & Co | Expert Chartered Accountants and Tax Advisors
Invest in Wasting Assets: Avoid Capital Gains Tax on Items with a Useful Life Under 50 Years
Under HMRC rules, ‘wasting assets’ – defined as assets with a predictable life of 50 years or less – are exempt from Capital Gains Tax. These include:
- Luxury watches
- Designer handbags
- Most fine wines and premium spirits
- Collectable racehorses
These assets can appreciate significantly over time and still be sold tax-free, offering an attractive CGT exemption for savvy investors. It’s one reason why high-net-worth individuals often diversify into alternative luxury assets.
Make Use of the Chattel Exemption: Sell Personal Possessions Under £6,000 to Avoid Capital Gains Tax
If you are looking for how to avoid capital gains tax when selling antiques or jewellery, the good news is that personal possessions known as ‘chattels’, such as antiques, art, jewellery, or gold bars, are CGT exempt if sold for £6,000 or less.
For example, buying a piece of jewellery for £2,000 and selling it for £5,500 would not trigger any CGT liability. It is a way to generate tax-free gains from collectables or family heirlooms.
Sell Cars Without Paying Capital Gains Tax
All gains from the sale of private motor vehicles are exempt from CGT, even if you make a substantial profit. This isn’t a loophole so much as a quirk of the tax system; most people sell cars at a loss, so HMRC doesn’t allow losses to be offset either.
We often get asked, are classic cars subject to capital gains tax UK? If you happen to own a classic or collectible car that’s appreciated, you can sell it completely free of Capital Gains Tax.
Spread Betting: Tax-Free Trading
In the UK, spread betting is considered gambling, and as such, it’s not subject to Capital Gains Tax or Income Tax, nor is it liable for Stamp Duty.
For example, rather than buying shares in a company like Tesco, you can open a spread bet position mirroring the price movement of those shares. If your bet gains in value, your profits are 100% tax-free.
Important note: Spread betting carries significant risk, especially with leverage. It’s not suitable for everyone and shouldn’t be treated as a long-term investment strategy. As Chartered Accountants, we are unable to provide financial advice but are regulated to provide tax advice.
Investing UK Gilts: Safe, Tax-Free Returns
UK Government Bonds (Gilts) are exempt from Capital Gains Tax. For example, if you purchase a gilt below its face value and hold it until maturity, any capital gain made is entirely tax-free.
Investors can buy gilts such as the 1/8% Treasury Gilt 2026 at a discount and receive the full face value at maturity, making gilts a CGT-free investment option.
Final Thoughts: Take Professional Tax Advice Before You Sell to Help Avoid Capital Gains Tax
Understanding which assets are exempt from Capital Gains Tax and how to structure your investments accordingly can have a significant impact on your overall financial planning.
However, tax rules can change quickly, and what is legal today may be revised tomorrow. At Alexander & Co, our expert tax advisers can help you:
- Structure your asset portfolio in a tax-efficient manner
- Take advantage of all available CGT reliefs and exemptions
- Plan disposals to minimise tax exposure
Want to reduce your Capital Gains Tax liability legally?
Get in touch with our expert tax team to discuss your options. We will help to ensure your investments are working in the most tax-effective manner for your future.
Contact Alexander & Co
If you would like to explore how to structure your business for optimal tax efficiency, please contact us.
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Call us today on either 0161 832 4841 or 0207 167 7220. Alternatively, you can email info@alexander.co.uk or use the contact form on this page.
The contents of this article was provided by Rowan Morrow-McDade, ACA, CTA, Tax Director at Alexander & Co. Rowan is a Chartered Accountant, Chartered Tax Advisor and a member of the ICAEW
