Take a £25,000 gain on shares by someone with £40,000 of taxable income in 2026/27. First the £3,000 annual exempt amount comes off, leaving a taxable gain of £22,000. Their unused basic-rate band is £37,700 plus the £12,570 Personal Allowance minus their £40,000 income, which is £10,270. That £10,270 of gain is charged at the 18 percent basic rate, giving £1,849, and the remaining £11,730 is charged at the 24 percent higher rate, giving £2,815. Total Capital Gains Tax is £4,664, leaving net proceeds of £20,336 from the original gain.
How it is calculated
Capital Gains Tax is charged only on the gain, not the sale price, and only after the annual exempt amount of £3,000 is deducted. The rate depends on how much of your basic-rate income band is still free. The calculator works out the unused band as £37,700 plus the Personal Allowance minus your taxable income, then taxes gain inside that band at the lower rate and the rest at the higher rate. For shares and most other assets the 2026/27 rates are 18 percent and 24 percent after the 30 October 2024 Budget aligned them with property. Residential property uses the same 18 and 24 percent rates. Your salary effectively stacks underneath the gain, so a higher income pushes more of the gain into the higher rate.
Frequently asked questions
What is the annual exempt amount?
For 2024/25 and 2026/27 the AEA is £3,000, the amount of capital gain you can realise tax-free each year. Down sharply from £12,300 in 2022/23.
What CGT rates apply to shares in 2026/27?
For shares and most other assets the rates are 18% for gains falling within the basic-rate band and 24% for gains above it. These rates were aligned with residential property rates following the October 2024 Budget. Your taxable income determines how much of the basic-rate band remains available to absorb the gain at the lower rate.
Does Capital Gains Tax apply to my main home?
Your primary residence is usually fully exempt from CGT under Private Residence Relief, provided you have lived in it as your only or main home throughout the period of ownership. If you let the property or used part of it exclusively for business, a proportionate part of the gain may become taxable. Additional homes and buy-to-let properties do not qualify for this relief and are taxed at the 18/24% residential rates.
When do I need to report and pay CGT?
For residential property sold on or after 27 October 2021, you must report and pay any CGT within 60 days of completion using HMRC's online CGT service. For other assets, gains are reported on your Self Assessment tax return for the relevant tax year, with payment due by 31 January following the end of that tax year. You still need to file a return even if the net gain falls within the annual exempt amount if HMRC requires it.