When you sell shares for more than you paid, the profit may be liable to Capital Gains Tax. With the allowance now just £3,000, even small investors get caught — here is how CGT on shares works in 2026/27.
Last updated 27 June 2026 · by site operator Mustafa Bilgic
Capital Gains Tax (CGT) is charged on the profit you make when you dispose of an asset, not the total amount you receive. For shares, that means the sale price minus what you originally paid (plus dealing costs). Each tax year you get a tax-free annual exempt amount, and for 2026/27 it is £3,000. You only pay CGT on total gains above that figure. The allowance has been cut hard — it was £12,300 as recently as 2022/23 — so disposals that used to be tax-free now often aren't.
The allowance cannot be carried forward: use it in the year or lose it. That single fact drives a lot of sensible year-end planning, as we'll see below.
From 6 April 2026, gains on shares are taxed at two rates depending on where the gain sits relative to your income tax band, per GOV.UK's Capital Gains Tax rates:
| Your income tax position | CGT rate on shares (2026/27) |
|---|---|
| Gain falling within the basic-rate band | 18% |
| Gain falling above the basic-rate band (higher / additional rate) | 24% |
Your taxable gain is added on top of your income to decide which slice is taxed at 18% and which at 24%. You can confirm the headline figures and thresholds on the breakdown of the 2026 capital gains tax rates before you estimate a sale.
Suppose you're a higher-rate taxpayer who sells shares in 2026/27 for a £9,000 gain (after costs):
A basic-rate taxpayer with the same £6,000 taxable gain (and enough unused basic-rate band) would pay 18%, or £1,080. To run your own numbers with your real purchase and sale prices, you can use a CGT calculator for shares that handles the allowance and both rates.
If you bought the same shares on several dates, you don't pick which ones you sold. HMRC groups identical shares into a Section 104 holding and your cost is the average cost across the pool. Two special matching rules come first: shares bought on the same day as the sale, and shares bought in the 30 days after the sale, are matched before the pool. This 30-day rule is what stops investors selling and instantly rebuying to crystallise a loss — the so-called "bed and breakfast" trick.
You report share gains either through Self Assessment or HMRC's real-time CGT service. You must report if your total gains exceed the £3,000 allowance, or if your total proceeds exceed £50,000, even when no tax is due. Keep contract notes and dividend vouchers as evidence of your cost.
Practice risk-free: buy and sell shares with $10,000 of play money in the stock market simulator to see how gains build before any real tax applies.
Not financial advice: this is educational content only, written by site operator Mustafa Bilgic, using HMRC figures for the 2026/27 UK tax year. Confirm your own position via GOV.UK or a qualified tax adviser.
The annual Capital Gains Tax exempt amount for 2026/27 is £3,000. You only pay CGT on total gains above £3,000 in the tax year.
From 6 April 2026 gains on shares are taxed at 18% within the basic-rate band and 24% above it, depending on your total income.
No. Gains on shares and funds inside a stocks and shares ISA are free of Capital Gains Tax, and you do not need to report them.
Shares of the same class are grouped into a Section 104 pool. Your cost is the average cost across all shares in the pool, after applying the same-day and 30-day matching rules.