Capital Gains Tax on Shares UK: How to Calculate CGT on Share Sales in 2025/26

If you sell shares, investment funds, or ETFs held outside an ISA or pension for more than you paid, you may owe capital gains tax on the profit. With the annual CGT exemption now just £3,000 for 2025/26, even modest share portfolios can generate a tax bill that needs calculating and reporting. Understanding how CGT applies to shares, what costs you can deduct, and how your income tax band affects the rate is essential for any UK investor.

This guide explains how to calculate CGT on share disposals, covers the current rates and reporting deadlines, and walks through worked examples for common scenarios. Use our capital gains tax calculator to estimate your liability on any share sale using current 2025/26 rates.

When CGT applies to shares

CGT applies when you dispose of shares or securities held outside a tax-wrapped account. A disposal includes selling shares, giving them away, transferring them to someone other than your spouse, and exchanging one investment for another. Each disposal is a separate event for CGT purposes, even if you immediately reinvest the proceeds.

Shares held inside an ISA are completely exempt from CGT. Gains and income within an ISA are tax free regardless of size. The same applies to shares held within a pension wrapper such as a SIPP. For most UK investors, maximising ISA contributions before holding investments in a general dealing account is the most effective way to avoid CGT on shares entirely.

Employee share schemes such as Share Incentive Plans and some Enterprise Management Incentive schemes have their own tax treatment. Shares acquired through these schemes may be subject to income tax at acquisition rather than CGT at disposal, or may qualify for specific reliefs. This guide covers CGT on shares bought and sold through standard dealing accounts.

How to calculate CGT on a share sale

The calculation starts with the gain on each disposal. Gain equals sale proceeds minus the allowable cost of the shares sold. Allowable cost includes the purchase price plus dealing charges on both purchase and sale. If you acquired shares at different times and prices, HMRC's share matching rules determine which cost base applies to each disposal.

For the full calculation framework including property and other assets, see our guide on how to calculate capital gains tax in the UK for 2025/26.

Share matching rules: which cost applies

When you sell shares of the same company that you bought on multiple occasions, HMRC applies matching rules in a specific order. First, shares bought on the same day as the sale are matched. Second, shares bought within the thirty days after the sale are matched (the bed and breakfasting rule). Third, all remaining shares are pooled into a single holding with an average cost base.

The pooling rule means that if you bought 100 shares at £10 and 100 shares at £20, your pooled cost is £15 per share. Selling 50 shares uses a cost of £15 each regardless of which purchase they came from. This simplifies record keeping for long-term investors but can complicate planning when you want to crystallise a specific gain or loss.

The 30-day bed and breakfasting rule

If you sell shares at a loss and buy the same shares back within thirty days, the loss cannot be claimed against other gains. Instead, the repurchased shares are matched against the original holding, and the loss is effectively deferred. This rule prevents investors from selling shares to crystallise a tax loss and immediately repurchasing them. The bed and ISA strategy works around this because repurchasing inside an ISA is not treated as a repurchase of the same shares for matching purposes.

CGT rates on shares for 2025/26

Shares are taxed at the standard CGT rates for non-property assets. Gains within your remaining basic rate income tax band are taxed at 18%. Gains above the basic rate threshold of £50,270 taxable income are taxed at 24%. The rate applies to the gain after deducting the £3,000 annual exempt amount and any allowable losses from other disposals in the same tax year.

Worked example: selling shares at a profit

Emma holds 500 shares in a listed company. She bought them in 2018 for £8,000 plus £12 dealing fee, giving a total cost of £8,012 or £16.02 per share. In 2025/26 she sells all 500 shares for £22,000, with a £12 dealing fee on sale. Her net proceeds are £21,988. Her gain is £21,988 minus £8,012, which equals £13,976.

After the £3,000 annual exempt amount, her taxable gain is £10,976. Emma's taxable employment income is £35,000, leaving £15,270 of basic rate band. The entire gain falls within the basic rate band, so she pays 18%: £10,976 multiplied by 18% equals £1,976 in CGT. She reports this on her Self Assessment tax return due by 31 January 2027.

Worked example: higher rate taxpayer selling shares

David sells shares for a gain of £25,000 in 2025/26 after dealing costs. His taxable employment income is £58,000, which is above the £50,270 basic rate threshold. After the £3,000 annual exempt amount, his taxable gain is £22,000. With no remaining basic rate band, the entire gain is taxed at 24%: £22,000 multiplied by 24% equals £5,280 in CGT.

If David had taxable income of £45,000 instead, he would have £5,270 of basic rate band remaining. The first £5,270 of his gain would be taxed at 18% (£949) and the remaining £16,730 at 24% (£4,015). Total CGT would be £4,964. The difference of £316 shows how income level directly affects the tax on the same share gain.

Worked example: offsetting losses against gains

Rachel sells Fund A for a gain of £8,000 and Fund B for a loss of £4,500 in the same tax year. Her net gain is £3,500. After the £3,000 annual exempt amount, her taxable gain is £500. At the higher rate of 24%, she owes £120 in CGT. Without the loss on Fund B, her taxable gain would have been £5,000 and CGT would have been £1,200.

Losses that exceed gains in a tax year can be carried forward indefinitely to offset future gains. If Rachel had a net loss of £2,000 instead, she would report the loss to HMRC and carry it forward. No CGT would be due in the current year, and the £2,000 loss would reduce gains in future years until fully used.

CGT on dividends versus capital gains

Dividends and capital gains are taxed differently. Dividends are taxed under the dividend tax regime, with a £500 dividend allowance for 2025/26 and rates of 8.75% for basic rate, 33.75% for higher rate, and 39.35% for additional rate taxpayers. Capital gains on share price appreciation are taxed under CGT at 18% or 24%.

For investors holding shares outside an ISA, both taxes may apply in the same year: dividend tax on income received and CGT on any shares sold at a profit. Our dividend tax guide for the UK explains the dividend allowance, rates, and how dividend income interacts with your overall tax position.

The bed and ISA strategy for shares

The bed and ISA strategy is one of the most effective ways to manage CGT on shares. It involves selling investments held in a general dealing account, using the annual exempt amount to shelter any gain, and immediately repurchasing the same investments inside an ISA using that year's £20,000 ISA allowance. Future growth and income within the ISA are then permanently tax free.

Because the repurchase happens inside an ISA wrapper, the 30-day bed and breakfasting rule does not apply. The sale crystallises the gain (or loss) in the current tax year, and the ISA purchase establishes a new tax-free holding. This strategy is particularly valuable when the annual exempt amount was higher, but remains worthwhile at £3,000, especially for couples who can each sell and rebuy within their own ISA.

Practical steps for bed and ISA

Check your unrealised gains across all holdings in your dealing account. Identify holdings where the gain is within or close to the £3,000 exemption. Sell sufficient shares to use the exemption, then transfer cash to your ISA and repurchase. Most platforms offer a bed and ISA service that handles the sale and repurchase in a single transaction. Allow a few days for settlement, and ensure you have sufficient ISA allowance remaining for the tax year.

Reporting CGT on shares

Gains on shares that exceed the £3,000 annual exempt amount must be reported on your Self Assessment tax return. The deadline for online filing is 31 January following the end of the tax year. CGT is due by the same date. If your total income and gains require you to pay tax at source through PAYE, you may need to make a balancing payment by 31 January.

You must register for Self Assessment if you are not already registered and your total gains exceed the annual exempt amount. HMRC's Real Time Capital Gains Tax service allows you to report gains during the tax year rather than waiting until the Self Assessment deadline, which can help with cash flow planning for large disposals.

Record keeping for share CGT

HMRC requires you to keep records of all share transactions for at least five years after the 31 January submission deadline of the relevant tax year. Records should include contract notes showing purchase and sale dates, prices, quantities, and dealing charges. For pooled holdings, maintain a running calculation of the average cost base after each purchase and disposal.

Most online brokers provide annual tax reports summarising gains, losses, and dividend income. These reports are a useful starting point but may not account for share matching rules correctly if you hold the same security across multiple platforms. Consolidating records across all accounts before calculating CGT avoids errors and ensures you claim all allowable losses.

Strategies to reduce CGT on shares

Maximise ISA contributions each year to shelter as much of your portfolio as possible from CGT. The £20,000 annual ISA allowance is use-it-or-lose-it. Transfer existing holdings into an ISA using the bed and ISA approach before gains exceed the CGT exemption. Both spouses should use their own ISA allowance and CGT exemption independently.

Time disposals to spread gains across tax years. Selling part of a holding in March and the remainder in April uses two £3,000 exemptions. Transfer assets to a spouse before selling to use their exemption and basic rate band. Harvest losses by selling underperforming holdings in the same year as profitable disposals to offset gains.

Model your specific share portfolio in the capital gains tax calculator before selling. Knowing your likely CGT bill in advance helps you decide whether to sell now, defer to the next tax year, or use the bed and ISA strategy to eliminate future liability on the same holdings.