The capital gains tax allowance on shares is £3,000 per person for the 2025/26 tax year, so you can realise up to £3,000 of profit from selling shares in the year before any tax is due.1GOV.UK. Capital Gains Tax: What You Pay It On, Rates and Allowances Anything above that is taxed at 18% if you’re a basic rate taxpayer and 24% if you’re a higher or additional rate taxpayer. The allowance has fallen sharply in recent years, and even a modest sale can now produce a bill.
How the £3,000 Allowance Works
The Annual Exempt Amount resets on 6 April each year. For 2025/26 individuals get £3,000 and trusts get £1,500.1GOV.UK. Capital Gains Tax: What You Pay It On, Rates and Allowances All your gains for the year are added together and the allowance is applied to the total, not to each disposal. Only the portion above £3,000 is taxable. Unused allowance cannot be carried into the next year, so if you don’t use it before 5 April, it’s gone.
Married couples and civil partners each have their own £3,000. Transfers between spouses living together happen at no gain and no loss, which means one partner can transfer shares to the other before a sale and the couple effectively uses £6,000 of allowance between them.2HM Revenue & Customs. Capital Gains Manual – CG22000 Transfer of Assets Between Spouses or Civil Partners The receiving spouse inherits the original cost, so the gain isn’t wiped out; it just moves to the person with the allowance to spare.
What Rate You Pay Above the Allowance
From 6 April 2025, gains on shares are taxed at 18% for basic rate taxpayers and 24% for higher or additional rate taxpayers.3GOV.UK. Capital Gains Tax: What You Pay It On, Rates and Allowances These replaced the previous 10% and 20% rates, so older calculators and guides will understate the tax.
Working out which rate applies means stacking the gain on top of your other taxable income. Deduct the £3,000 allowance from your total gains. Add whatever remains to your taxable income (earnings minus personal allowance). If the combined figure stays within the basic rate band of £37,700, the gain is taxed at 18%. If it goes over, the portion inside the band is taxed at 18% and the rest at 24%.3GOV.UK. Capital Gains Tax: What You Pay It On, Rates and Allowances A large gain can easily push a basic rate earner into the higher bracket for part of it, so it’s worth running the numbers before you sell.
Working Out the Gain on Shares You Bought in Batches
The basic sum is sale proceeds minus allowable costs. Allowable costs include the purchase price, dealing fees, and Stamp Duty Reserve Tax paid at 0.5% on electronic share purchases, plus any selling costs.4GOV.UK. Tax When You Buy Shares: Buying Shares Electronically
Where it gets more involved is when you’ve bought shares in the same company at different times and prices. You can’t cherry-pick the most expensive batch to shrink the gain. HMRC applies three matching rules in a fixed order to decide which shares you sold.5HM Revenue & Customs. HS284 Shares and Capital Gains Tax (2024)
- Same-day rule. Shares bought on the day of the sale are matched first, and the gain is the simple difference between purchase and sale price.
- Bed and breakfasting rule. Shares bought within 30 days after the sale are matched next. This stops you selling to bank a loss or use your allowance and immediately buying back in.
- Section 104 pool. Anything left is matched against your pooled holding. All shares of the same class in the same company are held as a single pool at a weighted average cost. Each purchase enlarges the pool; each sale takes a proportionate slice of the cost.
If you’re selling to use your annual allowance but want to keep holding the company, you need to wait at least 31 days before buying back, or buy into a different fund or share class in the meantime.5HM Revenue & Customs. HS284 Shares and Capital Gains Tax (2024) Keep records of every purchase date, quantity, price, and fee. HMRC can ask for them, and rebuilding pool figures years later is painful.
Cutting the Bill With Losses and Tax-Free Wrappers
Losses on share sales in the same tax year are set against your gains before the £3,000 allowance is applied. If losses exceed gains, the excess carries forward indefinitely. Current-year losses must be used in full, even if that drags your taxable gains below £3,000 and wastes some of your allowance. Losses brought forward from earlier years are more flexible: you only have to use enough to bring gains down to the allowance, and you can save the rest for a better year.6GOV.UK. Capital Gains Tax: What You Pay It On, Rates and Allowances – Losses To keep losses available, report them to HMRC in the year they arise, even if you owe no tax.
Some holdings sit outside the CGT system entirely, so gains on them don’t eat into your £3,000 or trigger any tax.
- Shares inside an ISA are fully exempt regardless of the size of the gain. The trade-off is that losses inside an ISA can’t be used against outside gains.7GOV.UK. Individual Savings Accounts (ISAs)
- Investments held in a Self-Invested Personal Pension or other registered pension scheme grow free of CGT. Income tax applies on the way out, not capital gains.
- UK government gilts are exempt when sold by individuals.8GOV.UK. Capital Gains Tax: What You Pay It On, Rates and Allowances – What You Do Not Pay It On
- Qualifying Corporate Bonds meeting the sterling-denominated criteria share the same exemption.
Losses on disposals to connected people, meaning family members other than your spouse, can only be offset against future gains from that same person.
Reporting and Paying
If your taxable gains stay under £3,000, you usually don’t need to tell HMRC. But you still have to report on a Self Assessment return if the total proceeds from your asset sales in the year exceeded £50,000, even when the gain is small or nil.9GOV.UK. Capital Gains Tax: What You Pay It On, Rates and Allowances – Work Out if You Need to Pay That trips up anyone selling a concentrated holding.
For taxable gains on shares, you have two routes. HMRC’s real-time Capital Gains Tax service lets you report and pay before filing your annual return; a gain from 2025/26 must be reported this way by 31 December 2026 and paid by 31 January 2027.10GOV.UK. Report and Pay Your Capital Gains Tax: If You Have Other Capital Gains to Report The alternative is Self Assessment, filed online by 31 January after the tax year ends, with any tax owed due on the same date. For 2025/26 that means 31 January 2027.11GOV.UK. Self Assessment Tax Returns: Deadlines If you used the real-time service, still include the gains on your Self Assessment return so the figures reconcile.