Shares Capital Gains Tax: 2026/27
UK CGT on Shares 2026/27: Calculator + Section 104 Pool
Complete UK Capital Gains Tax guide for share disposals 2026/27: Section 104 pool average-cost basis, same-day rule, 30-day "bed and breakfasting" rule, £3,000 annual exempt amount, 18% basic / 24% higher rate (post 30 October 2024), Bed and ISA + Bed and Spouse strategies, DRIP and scrip dividend cost-basis treatment, corporate actions (stock splits, takeovers, spin-offs), capital loss offset mechanics, BADR / Investors\' Relief for qualifying business shares, foreign-share FX conversion mechanics.
Overview - UK CGT on shares
UK Capital Gains Tax on share disposals applies whenever you sell, gift (other than to spouse), or otherwise dispose of listed shares (FTSE, AIM, US, foreign) or unlisted shares held outside an ISA / SIPP wrapper. The gain is calculated using the Section 104 pool average-cost method under section 104 TCGA 1992: all purchases of the same share class are pooled with their total cost, the cost basis per share is the weighted-average. When you sell, the cost basis is average cost × shares sold. Two exceptions override the pool: the same-day rule and the 30-day "bed and breakfasting" rule.
For 2026/27 the £3,000 annual exempt amount provides a tax-free first slice of gains. Above that, the marginal rate is 18% in the basic-rate income band and 24% in the higher and additional rate bands (rates from 30 October 2024 under the Autumn Budget 2024 reform, prior 10% / 20%). The applicable rate depends on where the gain sits relative to your total taxable income — a basic-rate-band taxpayer can find part of their gain taxed at 18% and part at 24% if the gain pushes them into higher rate.
Self Assessment registration is triggered if: (1) total disposals (gross proceeds) exceed £50,000 in the year regardless of net gain, (2) net gains exceed the £3,000 AEA, or (3) losses you want to claim against future gains require SA registration. Most retail investors with any meaningful share activity hit at least one trigger. Tax payable is due 31 January following the end of the tax year (so 2026/27 disposals are reported by 31 January 2028). Shares do NOT trigger the 60-day reporting requirement that applies to residential property disposals.
CGT rates and allowances 2026/27
| Item | Rate / Amount | Notes |
|---|---|---|
| Annual exempt amount (AEA) | £3,000 | Cut from £6,000 in 2023/24 and £12,300 in 2022/23. |
| CGT basic-rate band | 18% | From 30 October 2024 (was 10%). |
| CGT higher-rate band | 24% | From 30 October 2024 (was 20%). Same rate up to additional rate threshold. |
| BADR (Business Asset Disposal Relief) | 18% from 6 April 2026 | £1m lifetime cap. Requires 5%+ stake + 2-year hold + officer/employee status. NOT for ordinary listed shares. |
| Investors\' Relief | 18% from 6 April 2026 | £1m lifetime cap (cut from £10m Oct 2024). Unlisted trading company shares, 3-year hold, non-employee investor. |
| SA registration trigger - disposals | £50,000+ gross proceeds | Annual aggregate, regardless of net gain. |
Section 104 pool - worked example
Higher-rate-band investor builds an ABC plc holding via three purchases, then sells 600 shares during 2026/27 at £22/share:
| Date | Shares bought | Total cost | Cumulative shares | Cumulative cost |
|---|---|---|---|---|
| 2022-05-10 | 500 | £2,500 | 500 | £2,500 |
| 2023-08-15 | 200 | £1,800 | 700 | £4,300 |
| 2024-11-22 | 300 | £3,900 | 1000 | £8,200 |
| Pool at sale | 1000 | £8,200 | Avg cost £8.20/share | |
Disposal in 2026/27: 600 shares × £22/share = £13,200 proceeds. Cost basis: 600 × £8.20 = £4,920. Gain: £8,280. After £3,000 AEA: £5,280 taxable. At higher-rate 24%: £1,267 CGT payable.
Remaining pool after partial disposal: 400 shares with cumulative cost £3,280 (the unproportionate residue). Future disposals draw from this remaining pool at the same £8.20/share average cost basis.
Tax-saving strategies
Bed and ISA
The standard CGT shelter route for taxable General Investment Account holdings. Mechanic: sell shares from GIA (crystallising any gain, using £3,000 AEA), reinvest the cash into the SAME shares inside an ISA using up to £20,000 of the annual ISA allowance. Future gains, dividends and capital growth inside the ISA are entirely tax-free. The 30-day rule does NOT apply because the reacquisition is in a different tax wrapper. Most UK brokers offer streamlined Bed and ISA — typical transaction cost £1.50-£5 per holding. Strategy: do this annually to progressively shelter all GIA holdings into ISA.
Bed and Spouse
Spouse transfer route to use both AEAs. Mechanic: husband sells shares (uses his £3,000 AEA), wife buys the same shares with her own cash within or after 30 days. The 30-day rule does NOT apply because the reacquirer is a different legal person. Both spouses use their own £3,000 AEA, doubling the tax-free band to £6,000 per year. Inter-spouse transfers are themselves CGT-exempt under TCGA 1992 section 58 — so a couple can also transfer shares DIRECTLY between spouses without triggering a CGT event, allowing the AEA-rich spouse to dispose subsequently.
Loss harvesting
Sell losing positions before tax-year-end to crystallise the loss and offset against current-year gains. Carry-forward losses indefinitely if losses exceed gains in the year. Losses MUST be claimed on Self Assessment within 4 years of the loss year — unreported losses are lost permanently. Worth checking your portfolio in March each year for paper losses that could shelter taxable gains crystallised earlier in the same year.
Annual rebalance into ISA / SIPP
Routine investment portfolio rebalancing (sell overweight positions, buy underweight) inside an ISA / SIPP triggers ZERO CGT. The wrapper provides full tax shelter on all internal transactions. Strategy: do all rebalancing inside the wrapper, leave taxable GIA holdings as buy-and-hold positions where possible to defer CGT until forced disposal (e.g. retirement income need).
Corporate actions - cost basis treatment
| Event | CGT treatment | Notes |
|---|---|---|
| Stock split (2-for-1) | No CGT event | Share count multiplies; total cost basis unchanged; per-share cost halves. |
| Stock consolidation | No CGT event | Reverse split. Share count divides; total cost basis unchanged. |
| Cash takeover | Full CGT disposal | Cash proceeds standard disposal. AEA applies. Marginal-rate tax. |
| Share-for-share takeover | Rollover (section 135 TCGA 1992) | New shares inherit old shares\' cost basis. No CGT event at takeover. CGT triggers on eventual sale. |
| Spin-off / demerger | Partial disposal | Cost basis split between parent and spin-off based on relative market values at distribution. |
| DRIP / scrip dividend | New acquisition | Cost basis added equals gross dividend value. Dividend itself taxable as Income Tax. |
| Bonus issue (rights, scrip) | No CGT event | Share count increases pro-rata. Total cost basis unchanged. Per-share cost reduces. |
Frequently asked questions
How is UK Capital Gains Tax on shares calculated?
UK CGT on listed shares (FTSE, AIM, US, foreign) follows three steps. (1) Calculate the gain: sale proceeds minus cost basis (using the Section 104 pool average-cost method explained below) minus allowable selling costs (broker commission, FX conversion fees on overseas trades). (2) Apply the £3,000 annual exempt amount for 2026/27 — only the gain above £3,000 is taxable. (3) Apply the marginal CGT rate to the taxable portion: 18% basic-rate band, 24% higher and additional rate band (rates from 30 October 2024 post-Autumn Budget 2024). The applicable rate depends on your total taxable income for the year INCLUDING the chargeable gain — a basic-rate-band taxpayer can find part of their gain taxed at 18% and part at 24% if the gain pushes them into higher rate.
What is the Section 104 pool?
The Section 104 pool is the UK CGT cost-basis method for fungible shares of the same class in the same company. All your purchases of (e.g.) Apple stock across multiple years are pooled together with their total cost; the cost basis per share is the weighted-average cost. When you sell, the cost basis used is the average cost at the time of disposal, multiplied by the number of shares sold. The method is broadly equivalent to "average cost basis" in US tax terminology, but the UK does NOT permit FIFO, LIFO, or specific-lot identification for fungible shares. Two exceptions to the pool override it: (1) Same-day rule — any disposal on the same UK tax day as a same-asset acquisition is matched against that acquisition first at the acquisition cost. (2) 30-day rule — any disposal in the 30 days BEFORE a same-asset reacquisition matches against the future acquisition cost. Both exceptions defeat "bed and breakfasting" CGT manipulation.
What are the CGT rates on shares for 2026/27?
For disposals on or after 30 October 2024 (Autumn Budget 2024 reform), CGT on share gains is 18% for basic-rate-band taxpayers and 24% for higher-rate and additional-rate taxpayers. The annual exempt amount is £3,000 for 2026/27 (cut from £6,000 in 2023/24 and £12,300 in 2022/23). The applicable rate depends on where the gain sits in your total-income band: if your other taxable income is £30,000 and you have a £25,000 share gain (above the £3,000 AEA = £22,000 taxable), the part of the gain that fits within the remaining basic-rate band (£50,270 - £30,000 = £20,270 of headroom) is taxed at 18%, and the £1,730 above that at 24%. Total CGT: £20,270 × 18% + £1,730 × 24% = £4,064. The 24% higher rate applies up to additional-rate threshold (£125,140) — there is NO additional 28% rate on shares above that.
What is the 30-day "bed and breakfasting" rule?
Section 105 TCGA 1992 ("the 30-day rule") prevents harvest-and-rebuy CGT manipulation. If you dispose of shares and reacquire shares in the same company within 30 calendar days, the disposal is matched against the future reacquisition cost rather than the Section 104 pool. The rule was originally designed to stop investors selling at year-end to use the AEA then rebuying the next morning. With the AEA cut to £3,000 from 2024/25 the rule still bites — a common scenario: investor sells £10,000 of FTSE shares on 4 April 2026 to use the AEA, rebuys the same shares 5 April 2026 → 30-day rule applies, no AEA gain crystallised because the disposal is matched against the new acquisition cost. Workaround: sell on 4 April 2026, wait 31+ days then rebuy on 6 May 2026. Or "Bed and ISA" route (see below) which transfers the shares into the tax-free ISA wrapper instead.
What is the "Bed and ISA" strategy?
Bed and ISA is a CGT planning route that transfers shares from a taxable General Investment Account (GIA) into an ISA wrapper. The mechanic: (1) sell the shares from the GIA, crystallising any gain and using the £3,000 AEA, (2) reinvest the cash into the SAME shares inside an ISA, using up to £20,000 of the annual ISA allowance. Future gains, dividends and capital growth inside the ISA are entirely tax-free. The 30-day rule does NOT apply to Bed and ISA because the reacquisition is in a different tax wrapper (ISA vs GIA) — HMRC treats this as legitimate tax planning. Most major UK brokers (AJ Bell, Hargreaves Lansdown, Interactive Investor, Vanguard) offer Bed and ISA as a streamlined service, typically £1.50-£5 transaction cost per holding. The strategy is the standard route for investors with substantial GIA holdings approaching the £20,000 annual ISA allowance.
What is the "Bed and Spouse" strategy?
Bed and Spouse transfers shares between spouses to crystallise a gain without triggering the 30-day rule. The mechanic: husband sells shares from GIA, crystallises the gain (using his £3,000 AEA), wife buys the same shares with her own cash within or after 30 days. The 30-day rule does NOT apply because the reacquirer is a different legal person. Both spouses use their own £3,000 AEA, doubling the tax-free band to £6,000 per year. Inter-spouse transfers are themselves CGT-exempt under TCGA 1992 section 58 — so a couple can also transfer shares directly between spouses without crystallising gain, allowing the AEA-rich spouse to subsequently dispose and use AEA. The combined Bed and Spouse + Bed and ISA strategy can shelter £40,000 of shares per year tax-free (each spouse uses £20k ISA + £3k AEA = £23k of crystallised gain capacity).
How do I calculate cost basis for shares received via DRIP or scrip dividend?
Dividend Reinvestment Plans (DRIPs) and scrip dividends increase share holdings without a cash purchase. CGT treatment: each DRIP allocation is treated as a purchase at the gross value of the dividend that funded it, on the date the dividend would have been paid in cash. So a £45 quarterly DRIP that buys 2.5 shares adds £45 of cost basis and 2.5 shares to the Section 104 pool. The gross dividend itself is taxable as Income Tax in the year received (8.75% / 33.75% / 39.35% above £500 dividend allowance) — even though no cash was received. Scrip dividends (where the company offers shares as an alternative to cash) have parallel treatment: the cost basis added equals the gross value declared. Bonus issues (shares issued pro-rata without cost) add zero to total cost basis but increase the share count — the per-share average cost in the Section 104 pool consequently falls.
How are share splits, mergers and takeovers handled?
CGT cost-basis treatment for corporate actions: (1) Stock split — share count multiplies, cost basis stays the same, per-share cost reduces proportionally. A 2-for-1 split on 100 shares costing £1,000 leaves 200 shares costing £1,000 (£5/share down from £10). No CGT event. (2) Stock consolidation (reverse split) — share count divides, cost basis stays the same. No CGT event. (3) Cash takeover (e.g. £15/share cash offer) — CGT event triggered, disposal proceeds equal cash received. Standard Section 104 pool calculation. (4) Share-for-share takeover (target shareholders receive shares in acquirer) — typically a tax-free "rollover" under section 135 TCGA 1992: the new shares inherit the cost basis of the old. No CGT event at takeover. CGT triggers when the new shares are eventually disposed. (5) Spin-off / demerger — partial disposal proceeds allocated between parent and spin-off based on relative market values at distribution date. Each line item maintains its own Section 104 pool.
How do capital losses offset gains?
Capital losses can be offset against capital gains in the same tax year first. If losses exceed gains in a year, the excess is carried FORWARD indefinitely to offset future years' gains (but NOT carried backward, except in narrow death-year cases). Losses must be CLAIMED on Self Assessment within 4 years of the end of the loss year — losses NOT claimed within 4 years are lost permanently. Practical example: 2026/27 has £8,000 of gains and £5,000 of losses. Net £3,000 of taxable gains fully absorbed by the £3,000 AEA — zero CGT payable. 2027/28 starts with no carry-forward losses (all absorbed in 2026/27). Alternative scenario: 2026/27 has £2,000 of gains and £10,000 of losses. AEA NOT used (gains below £3,000 anyway). £8,000 of losses carried forward to offset future gains. Carry-forward is unlimited in time — a £20,000 loss in 2010 can still be claimed against a 2030 gain provided the original loss was reported on SA within 4 years of 2010 year-end.
When must I report and pay CGT on shares?
For shares (and most non-property assets), report via Self Assessment by 31 January following the end of the tax year. So 2026/27 share disposals are reported by 31 January 2028. Self Assessment registration is triggered if: (1) total disposals (gross proceeds) exceed £50,000 in the year regardless of net gain, (2) net gains exceed the £3,000 AEA, or (3) losses you want to claim against future gains require SA registration in the year of disposal. Most retail investors with any meaningful share activity hit at least one trigger. Tax payable is due 31 January 2028 alongside any Income Tax balance for 2026/27. NOTE: residential property disposals have a SEPARATE 60-day reporting requirement via the UK Property Disposal service — shares do NOT trigger this 60-day rule. Crypto disposals follow the same rules as shares (annual SA, no 60-day requirement).
What records must I keep?
HMRC requires records of: every share purchase (date, share count, price per share, broker commission, FX conversion if foreign), every disposal (date, share count, sale price, broker commission), DRIP / scrip dividend allocations (date, share count, gross dividend value), corporate actions (stock splits, takeovers, spin-offs), share transfers between spouses (where applicable for Bed and Spouse claims). Records must be retained 5 years after the relevant tax year — so 2026/27 records until 31 January 2032. Most UK brokers provide annual CGT summaries that pre-compute Section 104 pool and disposal calculations (Hargreaves Lansdown, AJ Bell, Interactive Investor, Vanguard). For investors with shares across multiple brokers OR foreign brokers (Interactive Brokers US, Charles Schwab, Schwab UK) manual reconciliation may be necessary because each broker only sees its own holdings. The pool is per-investor-per-share-class, NOT per-broker.
Do BADR or Investors' Relief apply to share disposals?
Two reduced-rate CGT reliefs may apply for qualifying share disposals. (1) Business Asset Disposal Relief (BADR, formerly Entrepreneurs' Relief): 18% rate from 6 April 2026 (was 14% in 2025/26, 10% pre-2025) on the first £1m of lifetime qualifying gains. Conditions: 5%+ ordinary share capital + 5%+ voting rights + 5%+ economic rights + officer or employee for 2 years before disposal. Designed for owner-director sale of trading company shares — does NOT apply to ordinary FTSE / listed-share investments. (2) Investors' Relief (IR): same 18% rate from April 2026, capped at £1m lifetime (cut from £10m in October 2024). Conditions: unlisted trading company shares subscribed in cash on or after 17 March 2016, held continuously for 3+ years, investor not an officer or employee. Applies to angel-investor-style equity in unlisted growth companies. EIS / SEIS shares have separate full CGT exemption rules after 3-year hold (see SEIS / EIS guide).
How do foreign shares (US, EU) interact with UK CGT?
UK-resident investors are taxed on worldwide gains under standard UK CGT rules. Foreign-listed shares (Apple US, ASML EU, Toyota Japan) follow the same Section 104 pool, same-day, and 30-day rules as UK shares — each foreign share class has its own Section 104 pool in GBP. The complication: cost basis must be converted to GBP at the spot exchange rate on the date of EACH purchase, and sale proceeds converted at the spot rate on the date of EACH sale. FX gains and losses are embedded in the GBP cost basis vs GBP proceeds — there is no separate FX-gain calculation. US dividend withholding tax (typically 15% under the UK-US treaty W-8BEN form) is a foreign tax credit against any UK Income Tax on the gross dividend, NOT against UK CGT. UK Foreign Tax Credit Relief (FTCR) handles any double-taxation on the gains where the foreign jurisdiction also imposes capital gains tax (most don't for UK residents under treaty provisions).
Related calculators and guides
- Capital Gains Tax calculator - general UK CGT computation across all asset classes including shares.
- UK CGT rules guide - full framework: rates, BADR schedule, AEA, residential vs other assets.
- Crypto CGT calculator - parallel Section 104 mechanics applied to cryptocurrency disposals.
- Business Asset Disposal Relief (BADR) guide - 18% rate from 6 April 2026 on qualifying business shares.
- SEIS & EIS guide - full CGT exemption on qualifying early-stage shares after 3-year hold.
- EIS / SEIS relief calculator - worked examples of 30% / 50% Income Tax relief + CGT mechanics.
- ISA types guide - Stocks and Shares ISA for tax-free share investment going forward.
- Dividend allowance guide - £500 dividend allowance and rates 8.75% / 33.75% / 39.35% on share dividend income.