Five top tips to avoid capital gains tax (CGT)

On the 22nd June we will have the new Governments first budget. It is widely predicted that we will see a rise in the capital gains tax rate on non business assets – maybe aligning rates with those of income tax.

Analysts are warning thousands of investors could be hit with massive CGT bills if a planned rise goes ahead. There are some practical ways to keep gains out of the taxman's hands, and here I list five of the main one’s:

Fully utilise your ISA allowance and hold as much of your investments as possible into ISA’s. With the full allowance at £10,200 most people will be able to put a large proportion of their investments into ISAs.

Everybody has an allowance of £10,100 in gains before any tax is charged so many people can avoid paying the tax by strategically selling assets in different tax years.

If you have any losses not utilised in previous years then you can carry these forward and offset against gains made, however you need to declare these losses with the Inland Revenue.

Transfer assets into your spouse's name. Transfers between married couples are not deemed as a sale so the original cost and gain is transferred across. This allows you to use both allowances of £10,100 to maximise CGT exemptions.

Consider Investing in CGT exempt products such as gilts or Venture Capital Trusts – a couple of investment options at different ends of the risk spectrum. Of course, do not invest simply to gain the CGT exemption, as the investment must match your risk tolerance and match your objectives.