Capital Gains Tax on shares

CGT on shares in 2026/27: the moving parts

Sell shares or funds outside an ISA or pension and the profit, sale price minus what you paid minus dealing costs, is a capital gain. The first £3,000 of gains each year is free under the annual exempt amount. Above that, the rate follows your income tax band: 18% for gains that fit inside your unused basic-rate band, 24% for the rest. The allowance was £12,300 as recently as 2023, so plenty of ordinary investors who never used to think about CGT now need to. The sum itself is short: taxable gain = sale proceeds − purchase cost − dealing costs − the £3,000 exempt amount, then 18% or 24% by band.

A worked example: £30,000 sold, £18,000 paid

Sell for £30,000 shares that cost £18,000 with £100 of dealing fees and the gain is £11,900. Knock off the £3,000 allowance and £8,900 is taxable. On a £45,000 salary there's £5,270 of basic-rate band left, taxed at 18%, and the remaining £3,630 falls at 24%: £1,820 of tax, keeping £10,080 of the profit. Owned jointly, the same sale uses two allowances and two bands, which on these numbers cuts the bill sharply, one of several reasons couples should decide whose name investments sit in before selling rather than after.

Mistakes that change the bill

UK rules pool every purchase of the same share or fund into one holding at average cost, so "I sold the expensive shares I bought last year" is not something HMRC recognises: the gain is measured against the pooled average, whichever units you meant to sell. Selling to use the allowance and buying straight back fails for a different reason. Repurchase the same share within 30 days and the sale is matched to the new purchase rather than the pool, quietly undoing the gain you meant to bank. Waiting 31 days, rebuying inside an ISA or pension, or having a spouse make the repurchase are the versions that work.

Accumulation funds catch the diligent. Reinvested distributions were already taxed as dividend income year by year and they raise your base cost, so using the original purchase price overstates the gain and taxes the same money twice: dig out the statements. One reassurance to finish. A capital gain never drags your salary into a higher band; income is stacked first and settles the 18% or 24% question, and the tax on your pay is untouched however large the gain.

Keeping future gains out of reach

The clean fix is the wrapper: gains inside an ISA never meet CGT, and moving existing holdings in, selling and instantly rebuying inside the ISA, known as bed and ISA, uses this year's £3,000 allowance to shelter the money permanently. Losses on other sales offset gains in the same year and can carry forward if reported. Spreading a big sale across two tax years captures two allowances. Property runs on different rates and deadlines, covered by the property CGT calculator, and for the invest-inside-a-wrapper argument in full, see the investment calculator.