Budget uncertainty puts stock gains in focus – here’s how investors can plan

Speculation that capital gains tax (CGT) rates could rise at the Budget may encourage some investors to bring forward plans to sell investments held outside ISAs and pensions. While no changes have been announced, the prospect of higher future tax rates could lead some investors to realise gains sooner rather than later.

CGT rate increases, if implemented, could come into force immediately, creating a change midway through the tax year. That’s what happened when rates increased in 2024, causing a headache for investors. Some will choose to act before the Budget as a result.

The strongest incentive to realise gains would be among investors who hold assets outside ISAs and pensions, have gains substantially above the £3,000 annual allowance, were already considering selling in the next year or two, and have significant exposure to long-term winners.

Among the most popular stocks held in AJ Bell Dealing accounts, Rolls-Royce has generated a share price return of 1,080% over the past five years, followed by Nvidia (+899%) and BAE Systems (+261%).

Why Dealing accounts are the key focus

Investors do not pay CGT on gains inside an ISA or SIPP, meaning the focus of any capital gains tax-related portfolio changes will be on Dealing accounts.

Also known as general investment accounts, any capital gains inside Dealing accounts are subject to tax once the individual has used up their £3,000 CGT annual allowance.

Outside of gilts, the most popular investments in AJ Bell Dealing accounts are UK blue-chip stocks, alongside a select number of growth-oriented investment trusts, and tracker funds following the price of gold and stock markets globally and in the US.

Most popular stocks in AJ Bell Dealing accounts

The table below shows the five-year performance and valuation metrics for AJ Bell’s most popular Dealing account stocks.

Certain investors might treat the CGT rate change speculation as a reason to reappraise their existing Dealing account holdings and potentially cash out with a view to redeploying the proceeds elsewhere. It’s natural to consider selling investments that have delivered exceptional gains or where valuations remain elevated.

Some might feel now is the time to get out while the going is good, while others might think that stock valuations eventually experience mean reversion so they shouldn’t pass up the opportunity to exit a high performing stock currently on an above-average rating.

The returns from Rolls-Royce are significant multiples of what someone might normally expect from a UK share, meaning long-term investors could be sitting on massive capital gains.

Rolls-Royce shares hit a five-year forward price-to-earnings (PE) high of 39.2 at the start of 2026, and while the rating has pulled back to 30.6, they still trade significantly above the five-year low of 19 times. That means Rolls-Royce could be among the stocks investors consider selling if they are looking to realise gains at current tax rates.

Nvidia has been a superstar on the stock market, but its shares are trading at an 11-year low of 16.8 times next 12 months’ forecast earnings. A significant derating in the stock since summer 2025 could encourage certain investors to hold onto the shares rather than abandon it completely, in the hope that its valuation could improve again.

The benefits of ‘Bed & ISA’ and ‘Bed & SIPP’

Those with unused ISA allowance in the current tax year might take advantage of the Bed & ISA process to transfer assets currently held in Dealing accounts. By doing so, they sell and immediately repurchase in their ISA. That means they pay any capital gains tax now and future gains are exempt from CGT once inside the ISA. Just be aware the total value moved via a Bed & ISA transaction would count towards your annual ISA allowance.

A similar system exists called Bed & SIPP, where the assets are sold from a Dealing account and repurchased in a self-invested personal pension in a back-to-back transaction. Note the cash proceeds from the sale are moved into your SIPP as a normal pension contribution, meaning they are eligible for government tax relief.

These transactions mean investors use up their CGT allowance, realise any taxable gain at the current rates and shift future growth into a tax-free ISA or pension. But they do mean some time out of the market.

Investors shouldn’t let the tax tail wag the investment dog. Any decision to sell should be driven primarily by investment objectives and portfolio needs, not speculation around future tax policy. It is also worth noting that CGT rates can and do fluctuate – a future government could undo any CGT rate hike and some investors will hope to play a waiting game, sitting on paper gains and doing nothing in the hope a future government drops rates back down.

Ultimately, nobody can say for certain and all investors will need to consider what is right for their own circumstances. However, it’s sensible to understand the options available should capital gains tax rates change.

Gilts remain popular

Short-dated gilts are the most popular asset held in AJ Bell DIY investors’ Dealing accounts. These are unlikely to be sold to beat any CGT rate hike as gilts are exempt from capital gains.

That’s a key attraction for investors, particularly those who have used up their ISA allowance and are looking for alternative tax-efficient ways to make money. They buy gilts below par and sell at maturity or if the price rises for a tax-free capital gain. In that respect, gilts stand apart from shares and funds because capital gains on gilts are exempt from CGT regardless of whether tax rates change.

Five ways to save on capital gains tax

There’s no need to panic at the rumours of potential changes to CGT. It’s particularly important not to take steps you could come to regret when the dust settles after the Budget if there are no changes to the tax.

However, it’s worth considering five sensible ways to ensure you don’t pay more capital gains tax than you need to:

1. Use a Stocks and shares ISA. Stocks and shares ISAs protect investments from both capital gains tax and dividend tax. This makes a difference not only when you withdraw money, but when you buy and sell to rebalance your portfolio as you go along. If you have investments outside an ISA and the available allowance, you can move them inside using the Bed & ISA process.
2. Consider pensions. If you’re happy to tie the investments up until the age of 55 (rising to 57 in 2028) growth is tax-free – plus you get income tax relief on contributions.
3. Think about the timing. You can often choose when to realise a gain, so you can take advantage of your annual capital gains allowance of £3,000 each year, realising gains up to this amount free of tax.
4. Use your losses. If you have made allowable losses, include them on your tax return, because they’ll be offset against gains in the same tax year. Once the losses have reduced your gain to the annual allowance, if you have any losses left over, you can carry them forward to a future tax year. 
5. Plan as a couple. Married people and civil partners can transfer assets without triggering a capital gains tax bill – although when they eventually sell, the gain is calculated from when it was first bought rather than when they received the gift. They can then realise £3,000 of tax-free gains each year and make the most of their ISA allowance – to protect the investments from CGT in future too.