Investors face higher tax on investment gains after the rates of capital gains tax (CGT) were increased in the Autumn Budget.

The Budget raised the main CGT rates to 18% or 24% (from 10% and 20%). This follows a cut to the CGT annual exempt amount (AEA) last year to just £3,000. This makes tax-efficient savings vehicles like ISAs and pensions more attractive as there is no CGT to pay on gains made in either wrapper.

Utilise pensions or sell shares

Other ways to potentially reduce future CGT liabilities include making additional contributions to pensions outside the CGT regime and making strategic use of the CGT AEA. If you are looking to realise a large gain, it may be worth selling shares in tranches over two or more years to utilise each year’s CGT AEA, as it cannot be carried forward.

Offset against losses

Capital losses can offset capital gains, and losses can be carried forward indefinitely to offset future gains if reported to HMRC within four years of the end of the tax year in which the asset was disposed of.

Transfers of assets between married couples and civil partners are CGT free, so there is scope to arrange finances as a couple, potentially reducing the total tax paid. Owning assets jointly is also effective as any gain is split equally.

As always, take advice before making key decisions about your finances.