If you own shares outside of an ISA or pension, you may be liable to Capital Gains Tax when you sell them. This guide explains how CGT applies to share disposals for the 2026/27 tax year, how to calculate your gain, and strategies to reduce your tax bill.
For a complete overview of CGT, see our Capital Gains Tax Guide. For more expert tax guidance, visit our homepage.
When Do You Pay CGT on Shares?
You pay CGT when you dispose of shares. A disposal includes:
- Selling shares.
- Gifting shares (unless to a spouse or civil partner).
- Transferring shares to someone else.
- Exchanging shares for other assets.
Important: You do not pay CGT on shares held within an ISA or a pension. Gains within these wrappers are tax-free.
How to Calculate Your Gain on Shares
Calculating your gain on shares can be more complex than other assets because you may have bought shares at different times and prices.
Step 1: Calculate the Sale Proceeds
- The sale price of the shares.
- Deduct any selling costs (e.g., broker commissions).
Step 2: Calculate the Purchase Costs
- The original purchase price of the shares.
- Add any purchase costs (e.g., broker commissions).
Step 3: Subtract the Costs from the Proceeds
- This gives you the gain.
Step 4: Deduct Your Annual Exempt Amount
- Deduct £3,000 from the gain. See our guide: Capital Gains Allowance.
Step 5: Apply the CGT Rate
- Apply the 18% or 24% rate, depending on your income.
Share Pooling Rules
If you bought shares in the same company at different times, you need to use the share pooling rules to calculate your gain.
Example
You buy 100 shares in Company A for £1,000 in 2020. You buy 100 shares in Company A for £1,500 in 2022. You sell 150 shares for £3,000 in 2026.
Using the Section 104 pool:
- Total shares: 200
- Total cost: £2,500
- Average cost per share: £12.50
- Cost of 150 shares: 150 × £12.50 = £1,875
- Gain: £3,000 – £1,875 = £1,125
- AEA: £3,000
- Taxable gain: £0 (as gain is below AEA)
Strategies to Reduce CGT on Shares
1. Use Your ISA Allowance
You can invest up to £20,000 per year in an ISA. Gains within an ISA are completely tax-free. Consider transferring shares into an ISA (known as a ‘Bed & ISA’).
2. Bed & ISA
This involves selling shares and immediately buying them back within an ISA. This triggers a CGT liability on the sale, but future gains are tax-free. The 30-day ‘bed and breakfast’ rule does not apply to Bed & ISA transactions.
3. Use Your Spouse’s Allowance
Transfer shares to your spouse to use their Annual Exempt Amount. Transfers between spouses are ‘no gain, no loss’.
4. Offset Losses
If you have shares that have fallen in value, you can sell them to realise a loss, which can be offset against your gains.
5. Spread Disposals
Spread disposals across tax years to use multiple Annual Exempt Amounts.
Reporting and Paying CGT on Shares
- If you already file a Self Assessment tax return, report the gain in your return by 31 January following the end of the tax year.
- If you don’t normally file a tax return, you can use the Real-Time CGT Service to report and pay without registering for Self Assessment. See our guide: Reporting Capital Gains.
How We Can Help
Calculating CGT on shares can be complex, especially with the share pooling rules. Our ACCA-qualified accountants can:
- Calculate your CGT liability accurately.
- Apply the share pooling rules correctly.
- Advise on tax-efficient share disposal strategies.
- Prepare and file your tax return.
Let us help you manage your CGT on shares.
📚 Related Guides
• Capital Gains Tax Guide
• Capital Gains Allowance
• Property Capital Gains Tax
• Capital Gains Tax for Landlords
• Investors and Capital Gains
• Capital Gains Tax Calculator
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