How to Calculate Capital Gains Tax on Shares UK 2026/27

The 2026/27 Rates: 18% and 24%

Capital gains on shares held outside an ISA or pension are subject to CGT in 2026/27 at 18% for gains within the basic-rate band and 24% for gains in the higher or additional-rate band. These rates changed in October 2024 (Autumn Budget): the previous rates for shares were 10% and 20%. Both shares and residential property now use the same 18%/24% rate structure.

The annual exempt amount is £3,000 for 2026/27. You subtract this from your total net gains before applying the CGT rate. Gains below £3,000 in the tax year are completely free from CGT. The rate you pay depends on how much of the basic-rate band (up to £50,270) remains after your salary and other income.

Step 1: Calculate the Gain Using the S104 Pool

When you sell shares, you cannot pick which specific shares you are selling. HMRC uses the Section 104 (S104) pool rule: all acquisitions of the same share are pooled together, and you use the average cost per share when calculating the gain.

Example: You bought 1,000 shares in a company at £2.00 each in 2019 (cost: £2,000), then bought another 500 shares at £3.50 each in 2022 (cost: £1,750). Your S104 pool now contains 1,500 shares with a total cost of £3,750, an average of £2.50 per share. In 2026/27, you sell all 1,500 shares at £5.00 each (proceeds: £7,500). Your gain is £7,500 minus £3,750 = £3,750. After the £3,000 annual exempt amount, your taxable gain is £750.

Step 2: Apply the Annual Exempt Amount

Continuing the example above: taxable gain = £3,750 − £3,000 = £750. If you have capital losses from other disposals in the same tax year, these are applied first (before the annual exempt amount). If you have carried-forward losses from previous years, they reduce the gain only to the extent needed to bring it down to the annual exempt amount, so carried-forward losses do not 'waste' the AEA.

Step 3: Work Out Your CGT Rate

Your CGT rate depends on how much basic-rate band remains after your other income. The basic-rate band runs from £12,570 (personal allowance) to £50,270. Your salary, pension and other taxable income fills this band first. Whatever gap remains up to £50,270 is available to absorb your taxable gains at 18%; gains above that are taxed at 24%.

Worked example, basic-rate taxpayer: Taxable income (salary) = £30,000. Remaining basic-rate band = £50,270 − £30,000 = £20,270. Taxable gain (from above) = £750. Since £750 < £20,270, the entire gain is within the basic-rate band: CGT = £750 × 18% = £135.

Worked example, higher-rate taxpayer: Same gain of £750, but salary = £60,000 (above the basic-rate threshold). No basic-rate band remains. CGT = £750 × 24% = £180.

Worked Example: Larger Gain Straddling Both Rates

Buy 1,000 shares at £2.00 (cost £2,000). Sell all 1,000 at £30.00 (proceeds £30,000). No other disposals in the year. Gain = £30,000 − £2,000 = £28,000. After AEA: taxable gain = £28,000 − £3,000 = £25,000.

Taxpayer has salary of £40,000. Remaining basic-rate band = £50,270 − £40,000 = £10,270. First £10,270 of gain at 18% = £1,849. Remaining £14,730 at 24% = £3,535. Total CGT = £5,384.

For a higher-rate taxpayer (salary £60,000), the full £25,000 taxable gain would be at 24%: CGT = £6,000. The difference illustrates why income level matters, the same gain costs significantly more for a higher-rate taxpayer.

The Bed-and-Breakfast Rule, 30-Day Matching

HMRC's bed-and-breakfast rule (Section 106A TCGA 1992) exists to prevent investors from selling shares to crystallise a gain or loss, then immediately repurchasing the same shares. If you sell shares and buy the same shares within 30 days, HMRC matches the sale against the new purchase, the S104 pool average is not used. The gain or loss is calculated using the cost of the shares repurchased, not the pool average.

To crystallise a real gain or loss, you either: wait more than 30 days to repurchase; buy back inside an ISA (where the rule does not apply to the ISA holding); or switch to a similar but legally different investment (e.g. a different fund tracking the same index) in the interim.

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. The annual ISA subscription limit is £20,000 per person for 2026/27. Once assets are inside the ISA wrapper, all future gains are permanently free from CGT, however large they grow.

The bed-and-ISA strategy (sell in the general account, use the annual exempt amount, repurchase inside the ISA) is the standard method for migrating existing holdings into the tax-free wrapper. Because the repurchase is inside an ISA, the 30-day same-account rule does not apply, you can sell and rebuy in the same day.