Capital Gains Tax on Shares in the UK: How to Calculate What You Owe
When share disposals create a CGT liability
UK Capital Gains Tax (CGT) is charged on the gain you make when you dispose of a chargeable asset — not on the proceeds. For shares held outside a tax shelter, a disposal happens when you sell, gift (other than to a spouse or civil partner), exchange in a corporate action, or — less obviously — when shares are transferred out of your name on a death-of-spouse basis or via a court order.
Shares held inside a Stocks & Shares ISA, a SIPP, or other tax-sheltered wrappers (e.g. VCT, EIS) generate no CGT liability on disposal. The wrapper is the shield. CGT only applies to shares held in a general investment account or directly in your name. The numbers below assume the latter.
The 2026/27 rates and allowances
| Item | 2026/27 | Notes |
|---|---|---|
| Annual exempt amount | £3,000 | Down from £6,000 in 2023/24 and £12,300 in 2022/23 |
| Basic-rate CGT (shares) | 18% | On gains falling in your unused basic-rate income band |
| Higher-rate CGT (shares) | 24% | On gains above the basic-rate band |
| Additional-rate CGT (shares) | 24% | Same as higher rate |
| Residential property CGT | 18% / 24% | Same rates as shares since the October 2024 alignment |
| Business Asset Disposal Relief | 14% | Up from 10% (rising to 18% from April 2026) |
The big structural change from October 2024 onwards was the alignment of share CGT rates with property CGT rates — both now sit at 18% (basic) / 24% (higher) for disposals on or after 30 October 2024. Prior to that, shares were taxed at the lower 10%/20% rate; the change effectively raised the tax bill on most share gains by 40-80%.
The £3,000 annual exempt amount is the single biggest piece of CGT planning available to most savers. It means a household where both spouses make use of the allowance can realise £6,000 of gains tax-free every year. Use the UK CGT calculator to test how a planned disposal lines up with your unused exempt amount and basic-rate band for the year.
How to calculate the gain on a single sale
The gain is disposal proceeds minus allowable costs:
- Allowable costs include the original purchase price, any stamp duty paid at acquisition, broker commissions on both ends, and certain incidental costs (e.g. legal fees on a private-company sale).
- Disposal proceeds are the actual cash received, or the market value if the disposal was a gift (to anyone other than a spouse) or below-market sale to a connected person.
Worked example: a basic-rate taxpayer Liam sold 1,000 Apple shares in May 2026 for £170 each, having bought them in March 2020 for £92 each plus a £15 broker fee. Sale commission was £20.
- Proceeds: 1,000 × £170 = £170,000
- Less disposal costs: £20 = £169,980
- Less original cost: (1,000 × £92) + £15 = £92,015
- Gross gain: £77,965
- Less annual exempt amount: £3,000
- Taxable gain: £74,965
Liam’s other taxable income for 2026/27 is £35,000 (after personal allowance). His basic-rate band runs to £50,270 (£37,700 above the £12,570 personal allowance). He has £15,270 of unused basic-rate band, so:
- £15,270 of the gain taxed at 18% = £2,748.60
- £59,695 of the gain taxed at 24% = £14,326.80
- Total CGT: £17,075.40
The pattern — gain partly at 18%, partly at 24% — is the most common case for working-age higher-rate-bracket savers realising a single material gain. Plug the same numbers into the calculator to confirm.
Section 104 pooling — the rule that catches most people out
When you’ve bought the same share over multiple dates at different prices, you can’t simply pick which specific shares you “sold” for tax purposes (that’s a US rule). UK rules apply pooling under Section 104 of TCGA 1992:
- All shares of the same class in the same company are treated as a single “pool”
- Each new purchase adds to the pool’s total cost and total number of shares
- The average cost per share is recomputed after each acquisition
- When you sell, the cost basis used is
shares sold × average cost per share
This means if you’ve been drip-feeding into a single name over years, the cost basis of any sale is the time-weighted average, not the price you actually paid for any specific tranche.
Worked example: Aoife built up a holding in a UK plc:
| Date | Action | Shares | Price | Cumulative shares | Pool total cost |
|---|---|---|---|---|---|
| 2021 | Buy | 500 | £10 | 500 | £5,000 |
| 2023 | Buy | 300 | £14 | 800 | £5,000 + £4,200 = £9,200 |
| 2025 | Buy | 200 | £18 | 1,000 | £9,200 + £3,600 = £12,800 |
Average cost per share: £12,800 / 1,000 = £12.80. If she sells 400 shares in 2026 at £20, the cost basis of that disposal is 400 × £12.80 = £5,120, and the gain is (400 × £20) − £5,120 = £2,880. The remaining pool: 600 shares with cost £12,800 − £5,120 = £7,680.
Get the pooling wrong and you’ll either overpay tax (using too-low a cost) or under-declare (using too-high a cost — which HMRC will eventually catch).
The 30-day “bed and breakfasting” rule
If you sell shares and then buy back the same class of shares in the same company within 30 days, the matching rule overrides pooling: the new purchase is matched against the sale (not the pool), eliminating the gain-realisation. The rule exists to stop the old trick of selling on 4 April and buying back on 6 April to crystallise a gain inside the annual exempt amount.
Two ways to use the £3,000 allowance without falling foul of bed-and-breakfasting:
- Bed and ISA: sell from the general account, immediately buy back inside a Stocks & Shares ISA. Same-day repurchase inside an ISA is not matched under the 30-day rule (the ISA is treated as a different legal owner). The gain crystallises, the £3,000 exemption is used, and the shares are now sheltered for future growth.
- Bed and Spouse: sell from your account, your spouse buys back in their account. Spousal transfers are at no-gain-no-loss for CGT, and the spouse’s later disposal uses their annual exempt amount. Useful when one spouse has used their allowance and the other hasn’t.
Both are well-established planning steps — not loopholes. HMRC has had over a decade to close them and hasn’t.
Losses and how to use them
Capital losses on shares can be offset against capital gains in the same tax year, with any excess carried forward indefinitely against future gains (but not against ordinary income).
There’s an important sequencing rule: losses must be used against gains in the same tax year before any of the annual exempt amount applies. This can waste the £3,000 allowance — if you make a £5,000 gain and a £5,000 loss in the same year, your net gain is zero, and the £3,000 exemption is also “used” against nothing.
To preserve the exemption, time the disposal: realise the loss in one tax year (carry it forward) and the gain in the next (use the exemption first, then offset the carried-forward loss against the excess). This requires planning across the 5 April tax-year boundary.
Reporting and payment deadlines
For shares (as opposed to UK residential property, which has a 60-day return), CGT is reported through self-assessment:
- File your tax return for the year in which the disposal happened by 31 January following the end of that tax year
- Pay the CGT due by the same 31 January deadline
- A gain of any size needs reporting if you’re already in self-assessment; if not, you must report if proceeds exceed £50,000 OR the gain exceeds the £3,000 annual exempt amount
The “real-time” CGT service on GOV.UK lets you report and pay during the year if you’d rather not wait, but it doesn’t change the underlying deadline.
Frequently asked questions
How is capital gains tax calculated on shares I inherited? Inherited shares acquire a “probate value” cost basis — the open-market value at the date of death. Any gain when you later sell is measured from that probate value, not the deceased’s original cost. This is one of the more generous parts of the CGT regime.
What about foreign shares (e.g. US-listed stocks)? Same UK CGT rules apply if you’re UK tax resident. Gains are computed in sterling using the exchange rate at acquisition and disposal — so currency moves can create paper UK gains even when the share price is flat in USD. Withholding tax on the disposal itself is unusual but US dividends do attract 15% withholding (claimable as a credit against UK tax via the double-tax treaty).
Do I pay CGT on Bed and ISA? Yes — the crystallisation of the gain triggers CGT at the point of sale from the general account. The point of Bed and ISA is to use the £3,000 exemption, not avoid CGT entirely. Once inside the ISA, future growth is tax-free.
How does CGT interact with Business Asset Disposal Relief? BADR (formerly Entrepreneurs’ Relief) reduces the CGT rate to 14% in 2026/27 (rising to 18% in 2027/28) on qualifying business disposals, with a lifetime cap of £1m of gains. It’s relevant if you’re selling shares in your own trading company that you’ve held for 24+ months as an officer or employee with at least 5% of voting rights — not for ordinary listed-share holdings.
Can I use my spouse’s allowance? Yes via the spousal transfer route described in the bed-and-breakfasting section. Transfers between spouses are at no-gain-no-loss, and your spouse uses their own £3,000 exemption on the eventual disposal. This is the highest-value CGT planning move for most couples.
This guide reflects the rules as they stand in the 2026/27 tax year. CGT mechanics around losses, claims, and reliefs can be intricate — for any disposal materially above the £3,000 exemption, double-check with an accountant before filing.