Published: June 2026 | Fact-Checked & Audited By: David Vance, CTA FCA (Chartered Tax Advisor & Accountant)
This guide is fully updated for the 2026/27 HMRC tax year. All calculations and tax rules have been audited against official UK legislation.
Investing in stocks and shares is one of the most popular ways to build long-term wealth in the UK, but it is vital to keep the tax man in mind. When you sell shares or investment funds outside of tax-sheltered wrappers, you may be liable for Capital Gains Tax (CGT). In the 2026/27 tax year, staying updated on share CGT rules is more important than ever following recent major rate alignments. In this guide, we break down how CGT applies to share disposals, the current rates, and how to calculate your liability.
How Does Capital Gains Tax Work on Shares?
Capital Gains Tax is a tax on the **profit (or gain)** you make when you sell or dispose of shares, rather than the total amount of money you receive. For example, if you purchase shares in a company for £5,000 and later sell them for £9,000, your capital gain is £4,000, not the full £9,000 sale value. You only pay tax on this gain after deducting your annual allowance and any allowable losses.
UK Share Capital Gains Tax Rates (2026/27)
Following the rate changes announced in the Autumn Budget, the Capital Gains Tax rates on shares and other financial assets have been fully aligned with residential property rates. The rates depend on your total taxable income:
| Taxpayer Band | Income Band Rate | Capital Gains Tax Rate on Shares (2026/27) |
|---|---|---|
| Basic Rate Taxpayer | Total income up to £50,270 | 18% |
| Higher / Additional Rate Taxpayer | Total income over £50,270 | 24% |
Matching Rules: Share Pooling and Section 104
You cannot simply decide which specific shares you are selling to manipulate your tax bill. HMRC uses strict “matching rules” (also known as the Section 104 holdings rules) to determine the cost basis of the shares you sell:
- Same Day Rule: Shares acquired on the same day as the sale are matched first.
- 30-Day Rule: Shares acquired within 30 days after the sale are matched next. This prevents “bed and breakfasting” (selling shares to realize a loss or use your allowance, and immediately buying them back).
- Section 104 Pool: All other shares of the same company are pooled together, and you use the average purchase price as your cost basis.
To accurately calculate the tax due on your stock market gains, use our Capital Gains Tax Calculator.
What People Search For: FAQs on Share Capital Gains Tax
1. How much is capital gains tax on shares in 2026?
For the 2026/27 tax year, the CGT rate on shares is 18% for basic rate taxpayers and 24% for higher or additional rate taxpayers. This represents a significant increase from the older 10% and 20% rates, aligning shares with property tax rates.
2. What is the capital gains tax allowance for shares?
The annual exempt amount (allowance) is £3,000 for individuals in 2026/27. This means you can make up to £3,000 of tax-free profit across all your taxable asset disposals during the tax year. Any gains above £3,000 are subject to CGT.
3. Do I pay capital gains tax on shares held inside an ISA?
No, absolutely not. All investments held inside an Individual Savings Account (ISA), such as a Stocks and Shares ISA, are completely exempt from Capital Gains Tax. You do not have to pay tax on any gains or declare them to HMRC.
4. What are the HMRC share matching rules?
HMRC matching rules determine which shares you are selling for tax purposes. They match sales against purchases made on the same day first, then purchases made within the next 30 days, and finally against the average cost of all remaining shares in your Section 104 pool.
5. Can I offset share losses against other capital gains?
Yes. If you sell shares at a loss, you can offset these capital losses against any taxable capital gains you made in the same tax year. If you have net losses, you can report them to HMRC and carry them forward indefinitely to offset future gains.
6. Do I pay CGT if I transfer shares to my spouse?
No. Transfers of shares between married couples or civil partners are treated as taking place on a “no gain, no loss” basis. The spouse inherits the original cost basis, allowing you to utilize both of your £3,000 annual allowances legally before selling.
7. How is cryptocurrency taxed compared to shares in the UK?
HMRC treats cryptocurrency assets identically to shares for tax purposes. You pay Capital Gains Tax on crypto profits at the same rates of 18% (basic rate) and 24% (higher rate), and can use the £3,000 annual allowance against your crypto gains.
8. What is a “Bed and ISA” transaction?
A Bed and ISA transaction involves selling shares held in a standard taxable brokerage account to realize the gain (utilizing your annual CGT allowance) and immediately repurchasing those same shares inside a Stocks and Shares ISA to shelter future gains from tax.
9. Do I pay tax when my shares pay out dividends?
No, dividends are not subject to Capital Gains Tax. Instead, they are subject to Income Tax under the Dividend Tax rules. You get a tax-free Dividend Allowance of £500, after which dividend income is taxed at 8.75% (basic rate), 33.75% (higher rate), or 39.35% (additional rate).
10. How do I report and pay capital gains tax on shares to HMRC?
You must report your capital gains on shares through your Self Assessment tax return or by using HMRC’s real-time Capital Gains Tax service. Tax on share disposals is generally paid by January 31 following the end of the tax year in which the sale occurred.