Pillar Guide · Updated June 2026
Capital Gains Tax When Selling Shares: UK Investor Guide 2026/27
When you sell shares or funds held outside an ISA or pension, any profit can be subject to capital gains tax. For 2026/27 the annual exempt amount is just GBP 3,000, after which gains are taxed at 18% in the basic-rate band and 24% above it. This guide explains the exempt amount, the rates, the share matching and 30-day rules, the Section 104 pool, using losses, ISA and spousal sheltering, and two worked examples.
Key CGT-on-shares figures -- 2026/27
- Annual exempt amount: GBP 3,000 per person
- Basic-rate band CGT: 18%
- Higher-rate band CGT: 24%
- Higher-rate threshold: GBP 50,270
- ISA / pension shares: CGT-free
- Matching: same day, then 30 days, then Section 104 pool
CGT on Shares: The Basics
Capital gains tax is charged on the profit you make when you dispose of an asset for more than it cost you. For shares and funds, a disposal usually means selling, but it can also include gifting (other than to a spouse), or transferring out of your name. The chargeable gain is broadly the sale proceeds less the original cost and any allowable expenses such as dealing charges.
Crucially, only gains outside tax wrappers are caught. Shares inside a Stocks and Shares ISA or a pension are free of CGT entirely. The rules below apply to a general investment account or shares held directly in certificated form.
Rates and the Annual Exempt Amount
Every individual has an annual exempt amount of GBP 3,000 for 2026/27. You deduct this from your total net gains for the year before any tax is due. The exempt amount cannot be carried forward, so an unused allowance is lost at the end of the tax year.
Gains above the exempt amount are taxed at 18% to the extent they fall in your remaining basic-rate band, and 24% above the GBP 50,270 higher-rate threshold. To find the rate, add the taxable gain on top of your income for the year. A basic-rate taxpayer with a small gain may pay all of it at 18%; a higher-rate taxpayer pays 24%.
These rates apply to shares and most other assets, and now also align with the rates on residential property gains.
Share Matching and the 30-Day Rule
Because shares of the same class are interchangeable, HMRC uses matching rules to decide which shares you sold. The order is:
- Same-day rule: the sale is first matched with any shares of the same class bought on the same day.
- 30-day rule: next, the sale is matched with shares of the same class bought in the 30 days after the disposal.
- Section 104 pool: any remaining shares are matched against the pooled holding (see below).
The 30-day rule blocks bed and breakfasting, where an investor sells to crystallise a gain or loss then buys back immediately to keep the holding. If you repurchase within 30 days, the original cost carries across and the intended tax effect is undone.
The Section 104 Pool
Shares not matched under the same-day or 30-day rules sit in a Section 104 holding, a single pool that records the total number of shares and their total cost. When you sell from the pool, the cost attributed to the sale is the average cost per share multiplied by the number sold.
Each purchase adds shares and cost to the pool; each sale removes a proportionate slice of cost. This averaging means you never need to identify specific share certificates. Good record-keeping of every purchase and sale is essential to compute the pooled cost accurately, especially after dividend reinvestment or rights issues.
Using Losses
Losses on share disposals are first set against gains in the same tax year. If losses exceed gains, the surplus is carried forward indefinitely and used against future gains, but only after the annual exempt amount has been applied in that later year.
You must claim losses with HMRC, generally within four years of the end of the tax year in which the loss arose, to preserve the right to use them. Crystallising a loss on a poorly performing holding can be a useful way to offset gains realised elsewhere.
ISA and Spousal Sheltering
Moving holdings into an ISA via Bed and ISA removes future gains from CGT entirely. Because the repurchase is in a different wrapper, the 30-day matching rule does not apply, so this is an effective way to use the GBP 3,000 exempt amount each year while re-establishing the holding tax-free.
Transfers between spouses and civil partners are CGT-free, so a couple can use two annual exempt amounts (GBP 6,000 in total) and two basic-rate bands. Bed and Spouse, where one partner sells and the other buys the same shares, crystallises a gain without triggering the 30-day rule.
Worked Examples
Example 1 -- basic-rate investor. Sarah earns GBP 28,000 and sells shares for GBP 18,000 that cost her GBP 11,000, a gain of GBP 7,000. Her income leaves ample basic-rate band, so the whole taxable gain is taxed at 18%.
- Gain: GBP 18,000 - GBP 11,000 = GBP 7,000
- Less annual exempt amount: GBP 3,000
- Taxable gain: GBP 4,000, all in basic-rate band
- CGT: GBP 4,000 x 18% = GBP 720
- Total CGT: GBP 720
Example 2 -- higher-rate investor. Tom earns GBP 70,000, well above the GBP 50,270 higher-rate threshold, and sells shares for GBP 40,000 that cost GBP 22,000, a gain of GBP 18,000. Because his income already fills the basic-rate band, the whole taxable gain is taxed at 24%.
- Gain: GBP 40,000 - GBP 22,000 = GBP 18,000
- Less annual exempt amount: GBP 3,000
- Taxable gain: GBP 15,000, all in higher-rate band
- CGT: GBP 15,000 x 24% = GBP 3,600
- Total CGT: GBP 3,600
Had either investor held the shares inside an ISA, the gain would have been free of CGT. Use the capital gains tax calculator to model your own disposals, including the pooled cost of multiple purchases.