Sarah Bradford explores how best to use capital losses and the annual exempt amount.
Capital gains tax (CGT) is a tax on the chargeable gain made on the disposal of an asset. It is not necessary to sell the asset; an asset may also be disposed of by giving it away or by exchanging it for something else.
A disposal also occurs for CGT purposes if compensation is received for an asset which has been lost or destroyed. Some assets are exempt from CGT.
Annual exempt amount
Individuals and trustees have an annual exempt amount, which is a CGT-free allowance for the tax year. For 2026/27, the annual exempt amount is set at £3,000 for individuals and £1,500 for trusts. If the annual exempt amount for a tax year is not used in full, it is lost – the unused amount cannot be carried forward to the next tax.&
