Capital Gains Tax on Shares
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What is Capital Gains Tax on Shares?
Capital Gains Tax (CGT) is the tax you pay on the profit when you sell or dispose of an asset that has increased in value. It’s not the total sale amount that’s taxed, but the difference between what you paid for the asset and what you sold it for.
Disposal of shares can include selling them for cash, gifting them (except to a spouse or civil partner, where special rules apply), swapping or exchanging shares, or receiving compensation, such as after a company buyback or restructuring.
Not all assets are subject to CGT, and the rate you pay depends on your income level and whether gains exceed HMRC’s annual tax-free allowance. Careful planning can significantly reduce or eliminate your tax liability.
How is Capital Gains Tax on Shares Calculated?
Calculating Capital Gains Tax on Shares involves working out the profit you’ve made when selling or disposing of your shares. The gain is the difference between what you paid for the shares (including any associated costs) and what you sold them for.
The basic steps are:
- Work out your sale proceeds – the amount you received when selling the shares.
- Deduct your purchase cost – what you originally paid for the shares, including broker fees or stamp duty.
- Deduct any other allowable costs – such as professional fees related to the purchase or sale.
- Arrive at your gain – this is your profit before any reliefs or allowances.
- Apply the annual CGT allowance – each individual has a tax-free allowance (£3,000 for 2024/25). Any gains above this may be taxable.
- Apply the correct tax rate – the rate you pay depends on your total taxable income:
- 10% if you’re a basic-rate taxpayer
- 20% if you’re a higher or additional-rate taxpayer
Zahtax – Your Capital Gains Tax Specialist
At Zahtax Accountants, we are specialists in Capital Gains Tax for both UK residents and non-residents. Whether you are selling shares, property, or other assets, our expert team provides tailored advice to ensure your tax liabilities are calculated accurately and efficiently. We have extensive experience navigating complex CGT rules, including reliefs, exemptions, and reporting requirements, helping clients minimise their tax while remaining fully compliant with HMRC. For non-residents, we provide clear guidance on UK Capital Gains Tax obligations, including the Non-Resident Capital Gains Tax (NRCGT) rules, ensuring international clients understand their liabilities and reporting responsibilities.
Capital Gains Tax Rates on the disposal of shares
When you sell or dispose of shares, you may be liable to pay Capital Gains Tax on Shares on any profit (gain) above your annual tax-free allowance. The rate of tax depends on your overall taxable income. It’s important to note that the annual CGT allowance for the 2024/25 tax year is £3,000, meaning you only pay tax on gains exceeding this amount.
Capital Gains Tax Rates 2025/26
Taxpayer Type
CGT Rate
Notes
Basic rate taxpayer
10%
Applies to gains above the annual allowance (£3,000 for 2024/25)
Higher and additional rate taxpayer
20%
Applies to gains above the annual allowance (£3,000 for 2024/25)
Why Choose Zahtax for Capital Gains Tax on Shares
- Expert Guidance on Disposal of Shares – We provide specialist advice for all types of share disposals, ensuring accurate calculations and compliance with HMRC rules.
- Experienced Capital Gains Tax Accountants – Our team has extensive knowledge in CGT, helping clients minimise tax while applying all available reliefs and exemptions.
- Tailored Advice for Residents and Non-Residents – Whether you are UK-based or abroad, we ensure your share disposals are handled correctly.
- Maximising Allowances and Reliefs – We identify all applicable tax-free allowances and reliefs to reduce your CGT liability.
- Stress-Free HMRC Reporting – We manage all filings and communications with HMRC, giving you peace of mind.
- Fixed-Fee Services – Transparent pricing with no hidden costs for your share disposal tax planning.
How Zahtax Can Help with Your Capital Gains Tax on Shares
- Expert Capital Gains Tax Specialists – Guidance from professionals with in-depth knowledge of CGT rules and reliefs.
- Accurate Calculations – Ensure your Capital Gains Tax on Shares is calculated correctly, including allowable costs and exemptions.
- Maximise Reliefs and Allowances – Apply all relevant tax-free allowances and reliefs to reduce your CGT liability.
- Full HMRC Compliance – We manage reporting and filing, including deadlines, to avoid penalties.
- Tailored Advice – Personalised strategies for individuals, investors, and non-residents.
- Stress-Free Process – From the disposal of shares to final tax submission, we handle the entire process on your behalf.
Frequently Asked Questions
Get answers to common questions about sole trader tax requirements and our services.
What is Capital Gains Tax on shares?
Capital Gains Tax (CGT) is a tax on the profit you make when you sell or dispose of shares. It is the gain that is taxed, not the total amount received from the sale. The tax applies to shares held outside of tax-efficient wrappers like ISAs or pensions.
What is the annual tax-free allowance for shares?
In the UK, every individual has a Capital Gains Tax annual exempt amount. For the 2024/25 tax year, this is £3,000, which you can use against your total gains before any tax is payable. This allowance is a ‘use it or lose it’ benefit and cannot be carried forward to future years.
How do I calculate the taxable gain on my shares?
The taxable gain is the difference between the sale price and the original cost of the shares. You can deduct certain allowable costs, such as broker fees and stamp duty, to reduce the total gain. Special rules, like the “same day” rule, apply when you buy and sell shares in the same company at different times.
What rate of CGT applies to shares?
Rates depend on your total taxable income: 10% for basic-rate taxpayers, 20% for higher-rate taxpayers on most shares.
Do I have to pay CGT if I gift shares?
Yes, gifting shares is considered a disposal, and you may be liable for CGT. The gain is calculated based on the market value of the shares at the time of the gift. An exemption applies for gifts to a spouse or civil partner, which can be a useful way to manage your tax position.
Are there any reliefs available?
Report gains through your Self Assessment tax return or HMRC’s online Capital Gains service if applicable.
Can a specialist help me?
A capital gains tax specialist can calculate your gain accurately, claim reliefs, and ensure HMRC compliance.