Capital Gains Tax on Shares: Rates and How to Report

Sold some shares at a profit and not sure what you owe HMRC? You're in the right place.

This guide explains how Capital Gains Tax (CGT) on shares works for the 2025/26 tax year: the rates, the tax-free allowance, the rules HMRC uses to match your shares, and the two ways you can report and pay. We've used current, verified figures throughout and shown the maths so you can follow it.

It's written for individual investors, company directors and contractors who hold shares outside an ISA or pension. If your shares are held in an ISA or a pension, you can relax, those gains are tax-free, and we'll come back to that.

Do you pay Capital Gains Tax on shares?

You pay Capital Gains Tax when you make a profit (a "gain") on disposing of shares that aren't held in a tax-free wrapper. "Disposing" means more than just selling. It also covers giving shares away, swapping them, or getting compensation for them.

Some shares are exempt, so there's no CGT to worry about. According to gov.uk, that includes:

• Shares held in an ISA or a PEP
• Shares in a personal or workplace pension
• Shares you give to your spouse, civil partner or a charity
• UK government gilts and Premium Bonds
• Qualifying Corporate Bonds and certain employee shareholder shares

So the tax bites on shares you hold in a general investment account, shares acquired through some employee schemes once they leave the wrapper, and similar holdings. If you're a director who's sold all or part of your company, that's a different and more involved scenario, and our tax advisory team can talk you through it.

What are the CGT rates on shares for 2025/26?

The rate you pay on shares depends on your Income Tax band. CGT sits on top of your income, so your other earnings decide how much of your gain is taxed at the lower rate and how much at the higher rate.

For disposals of shares (and other assets that aren't residential property), the rates for 2025/26 are:

These rates have applied to disposals made on or after 30 October 2024 and continue for 2025/26. They're confirmed on gov.uk's published CGT rates table.

A quick word on the bands. For 2025/26 the personal allowance is £12,570 and the basic rate band runs up to £37,700 of taxable income above that, so the higher rate of Income Tax starts at total income of £50,271. Those Income Tax thresholds are what decide your CGT rate, which is why your income and your gain have to be looked at together.

If you're disposing of shares in your own trading company, you may qualify for Business Asset Disposal Relief (BADR), which charges a reduced rate of 14% for 2025/26 on qualifying gains, up to a lifetime limit. BADR has its own conditions, so don't assume it applies. If you run a limited company and are thinking about selling up, get advice first.

How much can you make tax-free?

Every individual gets an annual tax-free allowance for capital gains, called the Annual Exempt Amount. For 2025/26 it's £3,000.

That means you only pay CGT on total gains above £3,000 in the tax year, after deducting any losses. The allowance covers all your chargeable gains for the year, not just shares, and you can't carry any unused part forward to next year. Use it or lose it.

It's a meaningful drop from a few years ago, so gains that used to be sheltered now often produce a tax bill. Planning the timing of disposals matters more than it once did.

How do you work out the gain on your shares?

Your gain is broadly the difference between what you sold the shares for and what you paid for them. You can then deduct allowable costs.

According to gov.uk, allowable costs you can deduct include:

• Stockbroker fees on buying and selling
• Stamp Duty Reserve Tax (SDRT) paid when you bought the shares

In some cases you use the market value rather than the price paid, for example if the shares were a gift (other than to a spouse or charity), if you sold them for less than they were worth, or if you inherited them.

So the headline sum is simple. The complication is working out the cost of the shares when you've bought the same shares at different times and prices. That's where the share matching rules come in.

What are the share matching rules?

When you sell shares of the same class in the same company, HMRC doesn't let you simply pick which ones you sold. It applies a fixed order to match your sale against your purchases. This stops people cherry-picking the highest-cost shares to shrink a gain.

The matching order is:

1. Same-day rule. Shares you sell are first matched against any shares of the same class in the same company that you bought on the same day.
2. The 30-day rule. Next, they're matched against shares you buy in the 30 days after the sale. This is the "bed and breakfasting" rule, and it blocks the old trick of selling to bank a gain or loss and rebuying almost immediately.
3. The Section 104 pool. Anything left is matched against your "Section 104 holding". This is a single pool of all your other shares of that class, held at their average cost.

The Section 104 pool is the part most people meet in practice. Every time you buy more of the same share, the pool grows and its average cost per share updates. When you sell, you use that average cost to work out the gain. Getting the pool right is fiddly by hand, especially after years of regular investing or dividend reinvestment, and it's a common area where DIY returns go wrong.

Worked example: CGT on a share sale

Illustrative example. Tom is a basic-and-higher-rate taxpayer with an employed salary giving him £40,000 of taxable income for 2025/26. During the year he sells shares from his general investment account and makes a chargeable gain of £15,000 after allowable costs. He has no capital losses and no other gains.

Here's the calculation step by step:

Now we find how much of his basic rate band is free. His taxable income is £40,000, which already uses up his personal allowance. The basic rate band is £37,700 of taxable income. So the band still available is £37,700 - £27,430 (his income above the £12,570 personal allowance) = £10,270.

So Tom's CGT bill on a £15,000 gain is £2,263.80. The figures here use the 2025/26 Annual Exempt Amount of £3,000, the personal allowance of £12,570, the basic rate band of £37,700, and the 18% and 24% share rates. You can sanity-check your own position with our capital gains tax calculator.

How do you report and pay CGT on shares?

For shares (unlike UK residential property, which has its own 60-day reporting rule), you have two routes.

Report straight away with HMRC's "real time" Capital Gains Tax service. You can report a gain online soon after the disposal, during the same tax year. If you use this service, the gain must be reported by 31 December after the end of the tax year in which you made it.

Report it in your Self Assessment tax return. If you already file Self Assessment, or you prefer to wrap everything into one return, you report the gain on the capital gains pages. The online filing deadline is midnight on 31 January following the end of the tax year, and any CGT due is payable by the same date.

For a 2025/26 disposal, that 31 January Self Assessment deadline falls on 31 January 2027. If you're not already in Self Assessment but need to report a gain through it, you'll need to register first, and the deadline to register is 5 October after the end of the tax year.

Keep your paperwork: contract notes, broker statements and records of costs. You'll need them to evidence the gain, and HMRC can ask. If filing this feels like a chore you'd rather hand over, our Self Assessment service takes care of the return and the CGT pages for you.

How can you legally reduce CGT on shares?

There are several legitimate, well-established ways to keep a CGT bill down. None of these is tax advice for your specific situation, but they're the levers most investors consider:

• Use your annual allowance each year. Spreading disposals across tax years can use more than one £3,000 allowance.
• Use both spouses' allowances. Transfers between spouses and civil partners are exempt, so a couple can use two annual allowances and potentially two sets of bands.
• Offset capital losses. Losses in the same year reduce your gains, and unused losses can usually be carried forward if you report them.
• Hold shares in an ISA or pension. Future gains inside these wrappers are free of CGT.
• Mind the 30-day rule. Selling and rebuying the same shares to "refresh" the cost doesn't work because of the bed-and-breakfasting rule.

Timing and structure make a real difference, particularly for startups and founders sitting on shares that have grown in value. A short conversation before you sell usually beats a clever fix afterwards.

Want help working out what you'll owe on a share sale, or planning a disposal tax-efficiently? Book a free 20-minute call with a Zmartly accountant and we'll talk it through.

Frequently asked questions

Book a free Tax Health Check →