Most people have an annual exemption for capital gains tax (CGT) of £10,600. You can only use this exemption if you dispose of something and realise a gain in the tax year. You can’t transfer an unused exemption to a different tax year or surrender it to any other person.

Say you make a gain of £60,600. After your annual exemption is deducted you will pay CGT of £14,000 (28% x £50,000). If you can split that gain into chunks of less than £10,600, realised over six tax years, you will pay no CGT.

If you have a portfolio of investments, it’s common for your investment manager to sell some near the end of the tax year to trigger capital gains or losses, and reinvest the proceeds in something else. There’s a cost in commission, but the tax saving is almost certainly much greater.

It’s important to make sure your investment manager knows if you have realised gains on other assets. If you’ve used up your annual exemption elsewhere, the switching plan won’t save you any tax.