Capital Gains Tax on Shares 2026/27: Rates, Share Matching and ISA Exemption

CGT Rates on Shares in 2026/27

Gains on shares and investment funds held outside ISAs and pensions are subject to CGT in 2026/27 at 18% for gains within the basic-rate band and 24% for gains in the higher-rate band. These rates apply to most shares, unit trusts, OEICs, ETFs and investment trusts. The rates changed in October 2024: the previous higher-rate rate was 20%, increased to 24% from 30 October 2024.

The annual exempt amount of £3,000 reduces the taxable gain. A basic-rate taxpayer with £5,000 of share gains pays CGT on £2,000 (£5,000 − £3,000 AEA) at 18% = £360. A higher-rate taxpayer with the same gain pays 24% on £2,000 = £480. The difference underlines why long-term investors should prioritise sheltering high-growth assets inside ISAs.

The Share Matching Rules

When you sell shares, HMRC applies matching rules to determine which shares are being sold (and therefore what the cost base is). The rules apply in this order: first, shares bought on the same day as the sale (same-day rule); second, shares bought within 30 days after the sale (the bed-and-breakfast rule); third, shares in the Section 104 pool (all other shares of the same type, averaged over time).

The bed-and-breakfast rule prevents investors from selling shares to crystallise a loss (or use the AEA) and then immediately repurchasing. If you sell 500 shares on 1 March and buy 500 of the same shares on 15 March (within 30 days), HMRC matches the sale against the new purchase, the pool average cost is not used. To avoid this, investors either wait more than 30 days to repurchase, buy the shares back inside an ISA (where the matching rule does not apply to ISA holdings), or switch to a similar but different fund in the interim.

How the Section 104 Pool Works

The Section 104 pool treats all acquisitions of the same share or fund as one pool. Acquisitions add to the pool, increasing the total cost and the number of shares held. When shares are sold, you use the average cost per share from the pool to calculate the gain. This prevents investors from cherry-picking high-cost lots to minimise gains.

For example, suppose you buy 1,000 shares in a fund at £2.00 each (cost £2,000), then later buy another 500 at £3.00 each (cost £1,500). Your pool now contains 1,500 shares at a total cost of £3,500, an average of £2.33 per share. If you sell 500 shares at £4.00 each (proceeds £2,000), the gain is £2,000 − (500 × £2.33) = £2,000 − £1,167 = £833.

ISA Exemption: No CGT on Shares Inside an ISA

Shares, funds and ETFs held inside a Stocks and Shares ISA are completely exempt from CGT (and dividend tax). The annual ISA subscription limit is £20,000 per person for 2026/27. Once money is inside the ISA wrapper, all future growth and income are tax-free, regardless of how large the gains become. There is no limit on the total ISA pot size, only on annual contributions.

For long-term investors, the ISA wrapper is the single most powerful tax-efficiency tool available. Holding a high-growth ETF inside an ISA eliminates CGT entirely on what could otherwise be a very large future gain. The bed-and-re-ISA strategy (sell in general account, use AEA, repurchase inside ISA) is the standard method for gradually migrating holdings from taxable accounts to ISA wrappers.