UK Capital Gains Tax (CGT)
Calculate your estimated liability on shares and investment sales for the 2024/25 tax year.
CGT Engine 2025/26
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UK Capital Gains Tax: The Definitive Guide for Investors
What is Capital Gains Tax (CGT)?
Capital Gains Tax (CGT) is a tax on the profit (the 'gain') you make when you sell (or 'dispose of') an asset that has increased in value. It's the gain you make that is taxed, not the total amount of money you receive.
In the context of the UK stock market, CGT applies when you sell shares, ETFs, or units in a unit trust held outside of tax-wrapped accounts like ISAs or Pensions. HMRC sets specific rules for how these gains are calculated, including how to handle multiple purchases of the same stock through "pooling."
HMRC CGT Calculation Formula
Gain = Selling Price – Buying Price – Allowable Costs*Allowable costs include brokerage fees and stamp duty.
Taxable Gain = Gain – Annual AllowanceTax = Taxable Gain × CGT Rate (10% or 20%)The Annual Exempt Amount (Allowance)
Every UK tax resident has an annual 'tax-free' allowance for capital gains. This means you only pay tax if your total gains in a tax year exceed this limit.
Important Note: The CGT allowance has been significantly reduced in recent years. Effective tax planning, such as utilizing ISAs and timing the sale of assets, is more critical than ever.
Advanced Logic: HMRC Matching Rules
When selling shares, you might have bought them at different times and prices. HMRC uses specific "matching rules" to determine which cost price to use:
Same Day Rule
Shares bought on the same day as the sale are matched first.
30-Day Rule
Shares bought within 30 days after the sale are matched next (prevents 'wash sales').
Section 104 Pool
All other shares are put into a "pool" with an average cost price calculated across all purchases.
CGT Rates for Shares & Investments (2024/25)
| Taxpayer Band | Income Tax Rate | CGT Rate (Shares) |
|---|---|---|
| Basic Rate | 20% | 10% |
| Higher Rate | 40% | 20% |
| Additional Rate | 45% | 20% |
Evolution of UK CGT
Capital Gains Tax was first introduced in the UK in 1965 by Chancellor James Callaghan to prevent people from avoiding Income Tax by converting income into capital gains. Since then, it has seen numerous reforms, including the 'Taper Relief' of the late 90s and the 'Indexation Allowance' (which was removed for individuals in 2008).
The current system focuses on a flat rate based on your income tax band, making it simpler but removing the protection against inflation that indexation once provided.
Did you know?
ISA contributions effectively 'shield' your investments from CGT forever. Maximizing your £20,000 annual ISA limit is the single most effective way to legally avoid CGT on future profits.
Capital Gains Tax (CGT) Frequently Asked Questions
When do you pay CGT?
Unlike Income Tax which is often deducted at source (PAYE), you must usually report and pay Capital Gains Tax yourself through a Self Assessment tax return. The deadline is 31 January following the end of the tax year in which you made the gain.
Financial & Tax Disclaimer
The results provided by this CGT Calculator are estimates for educational and planning purposes only. They do not constitute professional tax or financial advice.
Tax laws are complex and subject to change. Factors such as residence, domicile, and other income can affect your actual tax liability. Always consult with a qualified tax advisor or accountant before making significant financial decisions or filing your tax return with HMRC.
CalZone and its creators accept no liability for any loss or damage arising from the use of this information.