Capital Gains Tax on Shares Guide UK (Selling Investments 2026)

When You Pay CGT on Shares and Funds

CGT on shares arises when you sell, gift, or otherwise dispose of shares, units in a fund, or ETFs for a profit, and the total gains in the tax year exceed your annual exempt amount (£3,000 for 2026/27). CGT applies to: individual company shares traded on the London Stock Exchange, AIM, or foreign exchanges; unit trusts and OEICs (open-ended investment companies); Exchange-Traded Funds (ETFs); investment trusts; corporate bonds and gilts (though most gilts and qualifying corporate bonds are exempt from CGT — check the rules); cryptocurrency (treated as a form of property, not currency, so CGT applies on disposals); and share options (when you exercise or sell them). CGT does not apply to: shares held in an ISA or SIPP (all gains are tax-free inside these wrappers); shares held in a Personal Pension; Employee Share Ownership Plans (if certain conditions are met); and shares sold at a loss (you can claim the loss to offset against other gains in the same year or carry it forward). You also do not pay CGT if your total gains in the tax year are below the annual exempt amount. If your gains are below £3,000, you do not need to report them unless your total disposals (not gains) exceed £50,000 (the "disposal limit" for reporting). The key takeaway: if you hold investments outside an ISA or pension, track your gains throughout the year to stay within the annual exempt amount. See our Stocks and Shares ISA guide → for how to shelter investments from CGT entirely.

Annual Exempt Amount (£3,000 in 2026/27)

The annual exempt amount (AEA) is the amount of capital gains you can realise in a tax year without paying any CGT. For the 2026/27 tax year, the AEA is £3,000 for individuals. This has been significantly reduced from £12,300 in 2022/23 as part of the government's fiscal consolidation. The AEA cannot be carried forward — if you do not use it in a tax year, it is lost. However, you can transfer assets to your spouse or civil partner tax-free to use their AEA as well, effectively doubling the shelter to £6,000 per couple. Trusts have a separate, lower AEA (half the individual amount, currently £1,500). Reporting threshold: even if your gains are below the AEA, you must still report them on your Self Assessment tax return if your total disposals in the tax year exceed £50,000 (the "disposal consideration" threshold). If your gains are below £3,000 and your disposals are below £50,000, you do not need to report them at all. Planning around the AEA: since the allowance is "use it or lose it," consider realising gains each year up to the £3,000 limit even if you reinvest immediately (subject to the bed and breakfasting rules below). This "bed and breakfasting" strategy is restricted by anti-avoidance rules, but you can buy back shares after 30 days or buy different shares in the same sector. You can also sell shares to use your AEA and have your spouse buy them back (since they are a different person for tax purposes). For more on using spouse exemptions, see our UK Capital Gains Tax guide →.

CGT Rates on Shares (10% and 20%)

CGT on shares and other assets (excluding residential property) is charged at 10% for basic rate taxpayers and 20% for higher and additional rate taxpayers in 2026/27. These rates are lower than the property CGT rates (18% and 24%). The rate you pay depends on your total taxable income for the year. If your taxable income (after the personal allowance of £12,570) is below the basic rate band of £37,700, the portion of your gains that falls within the remaining basic rate band is taxed at 10%. Gains above that are taxed at 20%. Example: your salary is £30,000. After the personal allowance of £12,570, your taxable income is £17,430. The basic rate band is £37,700, so you have £20,270 of unused basic rate band (£37,700 minus £17,430). You realise a gain of £18,000 on selling shares. After the £3,000 annual exempt amount, the taxable gain is £15,000. All £15,000 falls within the unused basic rate band, so it is taxed at 10% — total CGT = £1,500. If your gain was much larger, the excess above the unused basic rate band would be taxed at 20%. Entrepreneurs' Relief (now called Business Asset Disposal Relief) reduces the CGT rate to 10% on qualifying business assets (including shares in your own company) up to a lifetime limit of £1 million. Investors' Relief provides a 10% rate on gains from qualifying shares in unlisted trading companies, up to a £10 million lifetime limit. These reliefs can significantly reduce your CGT bill — see our UK Capital Gains Tax guide → for more details on reliefs and exemptions.

Share Pooling Rules and Same-Day Rules

When you own multiple lots of the same share purchased at different times and prices, calculating the gain on a sale is not as simple as picking which shares to sell. The UK tax system uses share pooling (also called Section 104 holding) to average the cost of all shares of the same class in the same company. Here is how it works. Section 104 pool: all shares of the same class acquired on or after 6 April 2008 are added to a single pool. The pool has a total cost (sum of all purchase prices plus acquisition costs) and a total number of shares. When you sell some shares, the cost deducted is the average cost per share (total pool cost divided by total pool shares). Same-day rule: if you buy and sell shares on the same day, the sale is matched first against same-day purchases, not the Section 104 pool. This prevents you from creating artificial losses by selling shares and immediately buying them back at a different price on the same day. 30-day (bed and breakfasting) rule: if you sell shares and buy the same shares back within 30 days, the sale is matched against the new purchase, not the Section 104 pool. This prevents you from crystallising a gain or loss while maintaining your position (more on this in the next section). Example: you buy 100 shares at £10 each (£1,000). Then buy another 100 shares at £12 each (£1,200). The Section 104 pool has 200 shares with a total cost of £2,200 (average cost £11 per share). You sell 50 shares. The cost deducted is 50 x £11 = £550. If the sale price is £15 per share (£750), the gain is £200. Pre-2008 shares: shares acquired before 6 April 2008 are in a separate pool with different rules. Most investors no longer hold these, but if you do, the indexation allowance (frozen in January 2018) may affect your calculation.

Bed and Breakfasting (Anti-Avoidance Rule)

Bed and breakfasting is the practice of selling shares to realise a gain (using your annual exempt amount) or a loss (to offset other gains) and immediately buying them back to maintain your investment position. HMRC introduced anti-avoidance rules to prevent this. The 30-day rule: if you sell shares and buy the same shares back within 30 days (including the day of sale), the sale is matched with the new purchase, not with your Section 104 pool. This means the gain or loss from the sale is effectively cancelled out — you are treated as if you never sold them. The new shares inherit the original cost basis. How to legitimately use your annual exempt amount: you can still bed and breakfast if you wait more than 30 days before buying back. Or you can: sell shares and buy a different share in the same sector (e.g., sell Vodafone, buy BT); sell shares and have your spouse buy them back (since the anti-avoidance rules apply to the same person, not connected persons); sell shares and buy back in an ISA (you can sell general account shares and repurchase the same shares inside an ISA — the 30-day rule does not apply because the ISA is a different beneficial owner); or sell shares and buy back in a SIPP. The 30-day rule also applies to losses: if you sell shares at a loss and buy the same shares back within 30 days, the loss is disallowed and added to the cost of the new shares — you cannot use the loss to offset other gains. This is called the share loss purchasing rules. If you sell at a loss and your spouse buys the same shares within 30 days, the loss is also disallowed. Always plan disposals carefully if you intend to republish the same investment position. See our UK Capital Gains Tax guide → for more loss planning strategies.

Reporting and Paying CGT on Shares

Unlike CGT on residential property (which must be reported within 60 days), CGT on shares is reported through your annual Self Assessment tax return. The deadline is the same as the general Self Assessment deadline: 31 January following the end of the tax year. For the 2026/27 tax year, the filing deadline is 31 January 2028. You report your capital gains (and losses) on the Capital Gains Tax pages of the Self Assessment return (SA108). You need to list each disposal separately, showing the date, number of shares, proceeds, allowable costs, and the gain or loss. If you have many small disposals, you can summarise them. The tax is due at the same time as the rest of your Self Assessment bill (31 January). If you do not normally file a Self Assessment return, you must register for Self Assessment if your gains exceed the annual exempt amount or your disposals exceed £50,000. Losses: if you realised capital losses in the same tax year, they are automatically offset against gains before tax is calculated. Losses carried forward from previous years must be claimed on your tax return. You can also carry back losses to the previous tax year (within certain limits). Payment: you can pay your CGT bill via the same methods as your Self Assessment — online bank transfer (Faster Payments), debit card, direct debit, or by setting up a Budget Payment Plan for next year. If you cannot pay, see our Cannot Pay Your Tax Bill guide → for Time to Pay arrangements. Penalties for late reporting: late filing of your Self Assessment return triggers a £100 fixed penalty, escalating to daily penalties and percentage-based fines. Late payment of CGT triggers interest (currently 7.25%) and late payment penalties (5% after 30 days, 10% after 6 months, 15% after 12 months).

FAQs

Do I pay CGT on shares held in an ISA?

No. All gains within an ISA are completely tax-free. You can buy and sell shares inside an ISA without any CGT or Income Tax implications. This is the main reason to use your £20,000 ISA allowance each year.

What is the 30-day rule for buying back shares?

If you sell shares and buy the same shares back within 30 days, the sale is matched with the new purchase for CGT purposes. This prevents you from realising a gain or loss while maintaining your position. You must wait at least 31 days before repurchasing to crystallise the gain or loss.

How do I calculate CGT on shares if I bought them at different times?

Shares are pooled — all shares of the same class are averaged together in a Section 104 holding. The cost per share is the total cost of all shares in the pool divided by the total number. Same-day purchases and purchases within 30 days after a sale are matched separately.

Can I use my spouse's CGT annual exempt amount?

Yes. You can transfer shares to your spouse tax-free (no gain or loss). Your spouse can then sell them and use their own £3,000 annual exempt amount (2026/27), effectively doubling the household allowance to £6,000. This is a common year-end planning strategy.

What happens if I do not report CGT on shares?

If you fail to report gains above the annual exempt amount (or disposals above £50,000), HMRC can charge penalties (starting at £100, rising to daily and percentage-based penalties) plus interest on the unpaid tax. HMRC receives transaction data from brokers and banks, so undeclared gains are likely to be detected.