Capital Gains Tax on Shares: £3,000 Allowance and Reporting

Calculating the gain

Disposal proceeds minus the pooled purchase cost and allowable fees. Shares of the same company are pooled, with special matching rules for sales within 30 days of a purchase.

Reporting thresholds

You must report if gains are over £3,000, total proceeds exceed £50,000, or you want to claim a loss, even if no tax is due.

Using ISAs and spouses

Holding shares in an ISA avoids capital gains. Transfers between spouses are free of CGT, so each can use their own exempt amount.

Paying the tax

Gains on listed shares are paid through your return by 31 January, unlike UK residential property, which has a 60-day rule.

How gains on shares are worked out

When you sell shares held outside an ISA or pension, the gain is the sale proceeds less the allowable cost of those shares and any allowable dealing costs, such as broker fees and stamp duty on purchase. Each person has an annual exempt amount of £3,000, so only gains above that are taxed. The rates for the 2025/26 tax year are 18% to the extent your total taxable income and gains fall within the basic rate band, and 24% above it. Gains are added on top of your taxable income when deciding which rate applies.

You cannot simply pick which shares you sold. For shares of the same company, HMRC matching rules apply in a set order: first shares bought on the same day, then shares bought within the following 30 days (the 30-day rule), and finally the Section 104 pool, which holds all the other shares at an average cost. Understanding which rule applies is the single most important step in getting the numbers right.

Worked example: Section 104 pool

This is an illustrative example. Jordan bought 1,000 shares for £5.00 each, then 500 more at £6.00 each. Later Jordan sells 800 shares at £8.50, with dealing costs of £20.

The gain is under the £3,000 annual exempt amount, so there is no Capital Gains Tax to pay. Reporting may still be needed, depending on the total proceeds from all disposals in the year. Check current HMRC guidance for the proceeds reporting threshold.

A larger gain

Now suppose Jordan had other taxable income of £17,430 (employment income of £30,000 less the £12,570 Personal Allowance) and a total gain of £15,000. The taxable gain is £15,000 – £3,000 = £12,000. The remaining basic rate band is £37,700 – £17,430 = £20,270, which is more than the gain, so all of it is taxed at 18%: £12,000 x 18% = £2,160. If Jordan’s income had been in the higher rate band, the same gain would be taxed at 24%, giving £2,880.

Reporting capital gains on shares

Gains are reported on the capital gains pages of the Self Assessment return. You normally need to report if your gains exceed the annual exempt amount of £3,000, or if you want to claim a loss. There is also a rule based on total sale proceeds, so check current HMRC guidance if you made large disposals even without a taxable gain. Note that the 60-day report-and-pay rule applies to UK residential property gains, not to shares. Reporting a loss is worthwhile, because it can be carried forward and used against future gains.

Common mistakes with share gains

• Ignoring the 30-day rule after selling and then repurchasing the same shares.
• Using the first purchase price instead of the Section 104 average cost.
• Forgetting dealing costs and stamp duty.
• Not reporting a loss, and so losing the right to use it later.
• Overlooking gains on shares held on a platform that does not report to you.
• Assuming dividends and gains are taxed in the same way: they are separate.

Checklist

1. List every purchase and sale across the tax year (6 April to 5 April).
2. Match disposals using the same-day, 30-day and pool rules.
3. Calculate each gain or loss and total them.
4. Apply the £3,000 annual exempt amount and any carried-forward losses.
5. Report on your return by 31 January and keep records for five years after.

Related reading: the 30-day rule on selling shares, how to report capital gains to HMRC, the £3,000 annual exempt amount and how to claim capital losses. Our capital gains tax return service handles the calculation.

SATR is a trading style of Accotax. Our qualified UK accountants compute your gains and file online for a fixed fee from £199 + VAT.

This is general information, not personal tax advice.

Employee shares, platforms and record keeping

Many people acquire shares through workplace schemes as well as through a broker, and the tax treatment of those shares can differ at the time they are acquired. Keep the scheme paperwork showing the market value on acquisition, because that value usually becomes your base cost for later Capital Gains Tax. If you hold shares on several platforms, gather the annual statements from each one before you start, since the matching rules apply across all your holdings of the same company, not platform by platform.

Keep contract notes, dividend vouchers, and corporate action notices such as share splits or rights issues. Missing purchase records are the commonest reason a calculation takes far longer than it should, and HMRC expects you to be able to support the figures.

Frequently asked questions

Are dividends part of capital gains?

No. Dividends are taxed as income, separately from gains on selling shares.

Can I carry forward a loss?

Yes, if reported to HMRC within 4 years of the end of the tax year.

Do I pay tax on shares held in an ISA?

No. Gains and income within a stocks and shares ISA are tax-free, and the ISA allowance is £20,000 a year.

Can I use losses from earlier years?

Yes, if you reported them to HMRC in time. Reported losses can be carried forward and set against future gains, so claim them on your return.

What about dividends on shares?

Dividends are taxed separately. The dividend allowance is £500, and rates are 8.75%, 33.75% and 39.35% in 2025/26.

Official guidance: GOV.UK – tax when you sell shares.