How to Calculate CGT on Shares: Worked Example

The Order HMRC Works In

Most guides give you one formula: sale price minus purchase price, minus the allowance, taxed at 18% or 24%. That works if you bought your shares once and sold the lot. Buy the same share more than once, or buy again shortly after selling, and the calculation runs in a fixed order where each step feeds the next. HMRC works through four:

1. Match the shares you sold against shares you acquired, in a set priority order.
2. Work out the gain using the allowable cost of whatever those shares matched to.
3. Deduct losses and the annual exempt amountThe Capital Gains Tax allowance: the slice of gains you can realise each tax year before any CGT is due. It is £3,000 for 2026/27 and cannot be carried forward if unused. to get the taxable gain.
4. Apply the rate, which splits across 18% and 24% depending on your income.

Step one is the one people skip; step four is the one they get wrong.

Steps 1 and 2: Pool the Cost, Then Work Out the Gain

Shares of the same class in the same company are treated as identical, so you cannot nominate which ones you sold. Every purchase goes into a Section 104 poolHMRC's method for valuing shares of the same class bought at different times. All purchases are averaged into one pooled cost per share, used to work out the gain when you sell.: one running total of shares, one running total of cost. The allowable cost of a share you sell is the pool's cost divided by its quantity - a weighted average, not the price you paid on any one day.

Note what the pool did to the answer. Averaging Sarah's two purchases lifted her cost per share from £4.00 to £5.00, which took £1,000 off the gain on this disposal alone.

Your broker's contract notes give the price and dealing costs for each purchase. What platforms generally do not do is maintain the pool across accounts - it follows you and the share, so one company held with two brokers is still one pool.

Step 4: Your Rate Is Not One Number

This is the step the consensus routinely glosses over. "18% or 24%" is written as though you pick the one matching your tax band. You do not. Your taxable gain is added on top of your taxable income: only the slice that still fits inside the basic-rate band is charged at 18%, and everything above it at 24%. One disposal, one taxpayer, both rates.

GOV.UK frames the same sum differently: take your taxable income - after the £12,570 Personal Allowance - and measure it against the £37,700 basic-rate band. Sarah's taxable income is £32,430, leaving the same £5,270. Use HMRC's version if your Personal Allowance is tapered by income over £100,000.

When a Repurchase Overrides the Pool

Before the pool is touched, HMRC matches your disposal against two other things. The order, set out in TCGA 1992 and HMRC's helpsheet HS284, is: shares bought on the same day as the sale, then shares bought in the 30 days following it (the bed and breakfastingSelling shares to use your CGT allowance then quickly rebuying them. HMRC blocks it - shares rebought within 30 days match to the sale, not the cheaper pool, so no gain is crystallised. rule), and only then the Section 104 pool. Shares matched under the first two rules never enter the pool.

That rule is usually filed under "tax loss harvesting" and left there. It is worth seeing it change a live number.

One practical note: our shares CGT calculator applies this matching for you. Switch to full transaction history mode, enter or import every buy and sell, and it matches each disposal in this order automatically - same day, then 30 days, then the pool.

The rule bites regardless of why you rebought, so an ordinary change of mind is caught exactly as a deliberate harvest would be, and it applies only if you were UK resident at the time of the acquisition. For the ways around it, see the 30-day matching rule, bed and ISA, and bed and spouse.

Losses Have an Order That Can Cost You Your Allowance

Current-year and brought-forward losses are treated differently, and the difference is money. A loss made in the same tax year is set against your gains before the annual exempt amount is applied, and you have no choice about it.

That is the asymmetry: a brought-forward loss is rationed to what you need, a current-year loss is not - so realising a loss in a year with no gains usually leaves more of it intact, provided you later have gains above the allowance to use it against.

A loss only exists once you claim it - on your Self Assessment return, or by writing to HMRC if you are not registered, within four years of the end of the tax year of the disposal. Once claimed, it carries forward indefinitely.

What You Can Deduct, and When You Must Report

The allowable cost is more than the share price. Add the dealing commission on both the purchase and the sale, and the Stamp Duty Reserve Tax charged at 0.5% on electronic share purchases (on a paper stock transfer form, Stamp Duty applies at 0.5% above £1,000). You cannot deduct interest on money borrowed to buy the shares, research costs, or your own time.

Share gains go on your Self Assessment return in the tax year after the disposal, and the 60-day deadline you may have read about applies to UK residential property, not shares. Finally, this is a per-year, per-person exercise: the £3,000 allowance cannot be carried forward, so an unused one is gone on 5 April, and each spouse has their own. For the traps this guide does not cover - accumulation units, employee shares, foreign-currency purchases - see the CGT on shares overview.

Sources: HMRC helpsheet HS284 (share identification and pooling); HMRC CG51560 (same-day and bed-and-breakfast rules); GOV.UK Capital Gains Tax rates; GOV.UK losses; GOV.UK Tax when you buy shares.