How to Calculate Capital Gains Tax on Investments

Your Capital Gains Tax rate is decided after the gain is added to your income, not before it. That is why someone on a £46,000 salary, comfortably a basic rate taxpayer all year, can still pay 24% on part of a share sale. Rates for 2026/27 are 18% and 24%, and the annual exempt amount is £3,000.

The four steps

1. Work out the gain on each disposal. Sale proceeds minus what you paid, minus allowable costs: broker commission, stamp duty, and for property, improvement spending.
2. Subtract losses. Losses realised in the same tax year come off your gains before anything else. Unused losses from earlier years can be carried forward if you reported them.
3. Subtract the annual exempt amount. £3,000 for 2026/27, per person.
4. Split what is left across the bands. This is the step that gets skipped, and it is the one that decides your bill.

Why the rate is not a single number

Add your taxable gain to your taxable income. Whatever falls inside the basic rate band of £37,700 (2026/27) is taxed at 18%. Everything above it is taxed at 24%.

Taxable income here means your income after the £12,570 personal allowance and any other reliefs, not your salary.

Worked example

You earn £46,000 and sell shares at a £11,400 gain. No losses, no other disposals.

The effective rate on the £11,400 gain is 15.44%, and neither 18% nor 24% appears anywhere in that answer on its own.

Run the same disposal against a range of salaries and the pattern that emerges is that the band split, not the headline rate, is what moves the bill. Anyone whose taxable income sits within about £10,000 of £37,700 will straddle, and straddling is the normal case rather than the exception for the kind of gain that triggers a CGT bill at all.

Pooled cost for shares and crypto

You cannot pick which units you sold. UK rules pool identical holdings into a single average cost, called a Section 104 holding, and every disposal draws from that pool.

You buy 3 ETH at £1,940 and later 2 ETH at £2,615. The pool is £11,050 across 5 units, so £2,210 each. Selling 2 units for £3,480 each gives proceeds of £6,960 against a cost of £4,420, so the gain is £2,540.

Two rules override pooling, both aimed at the same trick. Anything bought on the same day as a disposal is matched first. Anything bought back within the following 30 days is matched next. That is what stops you selling to crystallise a loss and immediately rebuying the same holding.

Selling and rebuying inside an ISA is different and is allowed, because the asset genuinely changes hands into a wrapper. It also resets your cost basis to the current market value, which means every tracker you own will report the position as brand new at 0% return while it is the same money in the same fund.

What the rates apply to

These apply to shares, crypto, second properties and most other assets. The separate lower rates for non-property assets ended on 30 October 2024, so any guide still showing 10% and 20% is describing a regime that no longer exists and will understate a higher rate bill by four percentage points.

Business Asset Disposal Relief is charged at 18% from 6 April 2026. Trustees and personal representatives pay 24%.

Scotland

Capital Gains Tax is reserved to the UK Parliament, so Scottish residents pay 18% and 24% like everyone else.

The Scottish income tax bands still matter, because they change what counts as your taxable income and therefore where the band split lands. Scotland has six bands in 2026/27: starter 19%, basic 20%, intermediate 21%, higher 42%, advanced 45% and top 48%. Work out the split against the UK basic rate band of £37,700, not against the Scottish band boundaries.

Reducing the bill

Holding assets inside an ISA or a SIPP removes CGT entirely, which is the only complete answer here. Everything else is timing.

Transfers between spouses and civil partners are free of CGT, and your spouse has their own £3,000 exempt amount, so a jointly funded disposal can use two.

The move we would put ahead of bed and ISA for most people is simply splitting a large disposal across two tax years. It uses two annual exempt amounts, and more importantly it keeps each year's gain from being pushed over the band boundary. On the example above, halving the disposal across two years would have kept almost all of it at 18%. The obvious objection is that you carry market risk for the extra months and the exempt amount could be cut again, which is a real trade and the reason this is a judgement rather than a rule.

Losses are worth reporting even in a year you owe nothing, because unreported losses cannot be carried forward.

For the wider rules, including reporting deadlines and property, see UK capital gains tax on investments. To check a specific disposal, use the capital gains tax calculator.

Rates: GOV.UK, Capital Gains Tax rates and allowances. This page explains the rules and is not personal tax advice.