Capital gains tax (CGT) is one of the most commonly encountered taxes for UK investors who hold shares, funds, or exchange-traded funds outside of tax-sheltered accounts. According to HMRC's 2023-24 Capital Gains Tax statistics, approximately 369,000 individuals reported chargeable gains on their Self Assessment returns, with total gains of £77.8 billion - and that number is expected to rise significantly following the reduction in the annual exempt amount from £12,300 to £3,000. Despite its prevalence, many investors find the rules around CGT confusing, particularly when it comes to HMRC's share matching rules and the recent changes to rates and allowances. This guide provides a comprehensive overview of UK capital gains tax as it applies to share investors, covering everything from the basic principles through to reporting obligations.
What Is Capital Gains Tax?
Capital gains tax is a tax on the profit you make when you sell or dispose of an asset that has increased in value. As defined in the Taxation of Chargeable Gains Act 1992 (TCGA 1992), the taxable amount is the difference between what you paid for an asset (the acquisition cost) and what you received when you disposed of it (the disposal proceeds), after deducting any allowable costs such as dealing fees and stamp duty.
Key concept
CGT is charged on the gain, not the total sale proceeds. If you purchased shares for £5,000 and sold them for £8,000, the chargeable gain is £3,000 (before deductions for allowable costs).
CGT applies to a wide range of assets, including property, personal possessions worth more than £6,000, and financial investments. For the purposes of this guide, we focus exclusively on capital gains arising from the disposal of shares, securities, unit trusts, and exchange-traded funds.
Who Pays Capital Gains Tax in the UK?
Under TCGA 1992 s.2, you may be liable for capital gains tax if you are a UK resident and you dispose of chargeable assets during the tax year. HMRC's Capital Gains Manual (CG10150) defines a disposal broadly: in the context of share investing, a disposal includes selling shares, gifting shares to someone other than your spouse or civil partner, and exchanging shares as part of a takeover or merger.
ISAs and pensions are exempt
Investments held within an ISA (Stocks & Shares ISA, Lifetime ISA) or a pension scheme (SIPP) are completely free from capital gains tax. CGT only applies to investments in general investment accounts (taxable or dealing accounts).
Non-UK residents are generally not subject to UK CGT on share disposals, although they may be liable for CGT in their country of residence. If you have spent part of the tax year as a UK resident and part as a non-resident, split-year treatment may apply, and you should seek professional advice.
Current CGT Rates for Shares and Investments
The UK capital gains tax rates for shares and other financial assets changed significantly following the Autumn Budget 2024, announced by Chancellor Rachel Reeves on 30 October 2024. According to the HMRC Policy Paper "Capital Gains Tax rates increase" (published 30 October 2024), the changes took effect immediately, meaning the 2024/25 tax year is split into two periods with different rates. The Office for Budget Responsibility estimated this would raise an additional £2.5 billion per year by 2029-30.
Rates Before 30 October 2024
For disposals made before 30 October 2024, the following rates applied to gains on shares and financial investments:
| Taxpayer band | Rate (before 30 Oct 2024) |
|---|---|
| Basic rate | 10% |
| Higher / additional rate | 20% |
Rates From 30 October 2024 Onwards
For disposals made on or after 30 October 2024, the Chancellor increased the CGT rates on shares and other non-property assets:
| Taxpayer band | Rate (from 30 Oct 2024) | Change |
|---|---|---|
| Basic rate | 18% | +8pp |
| Higher / additional rate | 24% | +4pp |
These rates now align with the CGT rates previously applied only to residential property gains. The 2025/26 tax year uses the same 18% and 24% rates for the full year.
Your CGT rate depends on your total taxable income. If your taxable income plus your chargeable gains (after the annual exempt amount) fall within the basic rate band of £37,700 (for 2024/25), you pay the basic rate. Any gains that push you above this threshold are taxed at the higher rate. It is common for part of a gain to be taxed at the basic rate and part at the higher rate.
Annual Exempt Amount (CGT Allowance)
Every UK taxpayer receives an annual exempt amount, often referred to as the CGT allowance or annual exemption. This is the amount of capital gains you can realise each tax year before any CGT becomes payable. The annual exempt amount has been reduced dramatically in recent years:
| Tax year | Annual exempt amount | Change |
|---|---|---|
| 2022/23 | £12,300 | - |
| 2023/24 | £6,000 | -51% |
| 2024/25 | £3,000 | -50% |
| 2025/26 | £3,000 | - |
Important
The reduction from £12,300 to £3,000 over two years means far more investors now have a CGT liability. The annual exempt amount cannot be carried forward - if you don't use it in a given tax year, it's lost.
HMRC Share Matching Rules
When you sell shares, HMRC requires you to identify which specific shares have been disposed of in order to calculate the gain or loss. Because shares of the same class in the same company are fungible (interchangeable), HMRC applies a set of share matching rules - set out in TCGA 1992 ss.104, 105, and 106A - to determine the acquisition cost of the shares being sold. HMRC's Share Identification Rules guidance (CG51560) specifies that these rules must be applied in a strict order:
Same-Day Rule
Shares sold are first matched against any shares of the same class bought on the same day. This prevents manipulation of transaction timing to create artificial gains or losses.
Learn more about the same-day rule →30-Day Bed and Breakfast Rule
If no same-day match applies, shares sold are matched against any shares of the same class bought within 30 days after the sale. This prevents tax-loss harvesting by selling and immediately rebuying.
Learn more about the bed and breakfast rule →Section 104 Pool
Any remaining shares are matched against your Section 104 pool - a rolling average cost calculation for each holding. The pool updates every time you buy or sell shares.
Learn more about Section 104 pools →How to Calculate Your Capital Gains Tax Liability
Calculating your CGT liability involves several steps. Here is a summary of the process that applies for each tax year:
- Identify all disposals: List every sale, gift, or other disposal of chargeable assets made during the tax year (6 April to 5 April).
- Calculate the gain or loss on each disposal: For each disposal, apply the HMRC share matching rules (same-day, 30-day, and Section 104 pool) to determine the acquisition cost. Subtract the acquisition cost and any allowable expenses (such as broker fees and stamp duty) from the disposal proceeds to arrive at the gain or loss.
- Aggregate gains and losses: Add up all gains and all losses for the tax year. Offset any current-year allowable losses against your total gains. You must offset current-year losses in full; you cannot choose to save them for a future year.
- Apply brought-forward losses: If you have capital losses carried forward from previous years, you may apply enough of these to reduce your net gains to the level of the annual exempt amount (but not below it).
- Deduct the annual exempt amount: Subtract the annual exempt amount (£3,000 for 2024/25 and 2025/26) from the net chargeable gains.
- Apply the appropriate CGT rate: Determine whether you are a basic rate or higher rate taxpayer by adding your taxable income to your remaining chargeable gains. Apply the relevant rate (18% or 24% for disposals from 30 October 2024 onwards) to calculate your tax due.
This process can become complex when you hold multiple stocks, have made numerous transactions across the year, and need to apply the share matching rules correctly for each disposal. This is precisely the kind of calculation that FiscalFox automates for you.
Reporting Capital Gains to HMRC
Under UK tax law, you are required to report your capital gains to HMRC through Self Assessment. GOV.UK capital gains guidance and the SA108 notes explain that you must report if any of the following apply:
You must report if:
- •Your total disposal proceeds exceed £50,000 for the 2023/24 tax year onwards, if you are registered for Self Assessment
- •You have a net capital gain that exceeds the annual exempt amount
- •You want to claim an allowable capital loss
- •HMRC has asked you to report capital gains or provide disposal details
Capital gains from shares are reported on the SA108 supplementary pages (Capital Gains Summary) which form part of the Self Assessment tax return. The key boxes on the SA108 form for share disposals include the number of disposals, total disposal proceeds, total allowable costs, and the resulting gains and losses.
Filing deadlines for 2024/25
Online: 31 January 2026
Paper: 31 October 2025
HMRC charges penalties for late filing and interest on late payment.
Capital Losses
Capital losses arise when you dispose of an asset for less than its acquisition cost (TCGA 1992 s.16). Allowable capital losses are a valuable tool for reducing your overall CGT liability. According to HMRC's Capital Gains Manual (CG15800), losses must be used in a specific order, and there is a four-year time limit for reporting losses you wish to carry forward.
Losses incurred in the current tax year must be offset against your gains in that same year, even if doing so reduces your net gains below the annual exempt amount. You cannot choose to carry forward current-year losses if you have gains available to offset them against.
If your total losses for the year exceed your total gains, the excess losses can be carried forward indefinitely to offset against gains in future tax years. However, to preserve the right to carry forward losses, you must report them to HMRC within four years of the end of the tax year in which they arose.
Example
Suppose you have total gains of £15,000 and losses of £2,000 in 2024/25. You must offset the £2,000, leaving £13,000. After deducting the £3,000 annual exempt amount, your taxable gains are £10,000. If you also have £5,000 brought-forward losses, you could use all £5,000 to reduce taxable gains to £5,000.
For a more detailed guide, see our page on capital losses and how to carry them forward.
How FiscalFox Helps
Calculating capital gains tax on shares manually is time-consuming and error-prone, particularly when you need to apply HMRC's share matching rules across dozens or hundreds of transactions. FiscalFox is designed to automate this entire process.
Upload CSVs
9 built-in broker formats plus opt-in AI import for unsupported files
Auto-calculate
Same-day rule, 30-day rule, and Section 104 pool applied automatically
HMRC-ready output
Figures map directly to SA108 form boxes for your Self Assessment
Built-in broker files are processed locally in your browser. Unsupported broker AI imports are opt-in and ask for consent before sending a file to the parser. Whether you are a buy-and-hold investor with a handful of disposals or an active trader with hundreds of transactions, FiscalFox provides the accuracy and convenience needed to fulfil your CGT reporting obligations with confidence. Visit the calculator dashboard to get started.