Shares Capital Gains Tax Breakdown
When you sell, swap, or dispose of shares, equities, mutual funds, or ETFs held in a standard General Investment Account (outside a Stocks & Shares ISA or pension), any profit realized above your original purchase cost is subject to UK Capital Gains Tax (CGT).
To calculate share capital gains accurately, HMRC applies strict share matching rules—notably the Section 104 Pool rule—which combines shares of the same company into a single pool with a weighted average cost per share, alongside specific “Same Day” and “30-Day Bed and Breakfasting” matching rules.
⚙️ Rules & Thresholds
- CGT Annual Exempt Amount (2026/27): £3,000 per individual tax year. Gains up to £3,000 across all assets are tax-free.
- CGT Rates for Shares:
- 10% for gains falling within your unused Basic Rate Income Tax band (£50,270 limit).
- 20% for gains exceeding your Basic Rate Income Tax band.
- HMRC Share Matching Order:
- Shares bought on the Same Day as disposal.
- Shares bought within 30 Days after disposal (“Bed and Breakfasting” rule).
- Shares in the Section 104 Pool (weighted average cost of all remaining shares).
- Bed & ISA Transfer: Selling unwrapped shares and repurchasing them inside an ISA triggers a CGT disposal event.
📊 Practical Examples
- Sale Proceeds: £15,000
- Original Section 104 Cost: £7,000
- Brokerage Fees: £100
- Gross Capital Gain: £7,900 (£15,000 - £7,100)
- Annual Exempt Amount Applied: -£3,000
- Net Taxable Gain: £4,900
- Income: £38,000 (Fully within Basic Rate Band)
CGT Calculation: £4,900 taxable gain × 10% basic CGT rate = £490.00 tax due.
📑 Common Pitfalls
- Ignoring the 30-Day Re-acquisition Rule: Selling shares to use your £3,000 CGT allowance and repurchasing the exact same shares within 30 days matches the sale against the new purchase price, nullifying the allowance benefit!
- Forgetting to Report Capital Losses: Capital losses incurred when selling shares for a loss must be claimed on your Self Assessment tax return; claimed losses can be carried forward indefinitely to offset future gains.
- Failing to Utilize ISA Wrappers: Paying CGT on share gains when you have unused £20,000 annual ISA allowances represents avoidable tax drag.
❓ Frequently Asked Questions (FAQ)
The Section 104 Pool is an HMRC accounting rule where all shares of the same company held by an investor are grouped into a single pool. Every time you purchase additional shares, the total cost and total quantity are added to the pool to calculate a single weighted average cost per share for CGT calculations.
No. All capital gains, dividends, and interest accumulated inside a UK Stocks & Shares ISA or SIPP pension wrapper are completely 100% exempt from HMRC Capital Gains Tax and Income Tax, regardless of the size of the profit realized.
To prevent investors from selling shares at the end of the tax year simply to realize gains within the annual exempt allowance and immediately buying them back, HMRC matches any share disposal against purchases of the same company made within the following 30 days before matching against the Section 104 pool.
You can report capital gains on shares exceeding your £3,000 annual allowance either by filing an annual Self Assessment tax return or by using HMRC's real-time 'Capital Gains Tax on UK Property and Assets' online reporting service by 31 December following the end of the tax year.