Written by the TaxTune Editorial Team · Reviewed by our qualified accountants · Updated for 2026
The quick answer When you sell shares outside an ISA or pension, you pay capital gains tax on the profit above the £3,000 annual exempt amount, at 18% or 24% depending on your income. Shares held inside an ISA or pension are free of capital gains tax entirely.

How to work out the gain

  1. Take the sale proceeds. What you received for the shares.
  2. Deduct the cost. What you paid, plus dealing costs. Where you bought the same shares at different times, they are pooled at an average cost.
  3. Apply the allowance. The first £3,000 of total gains in the year is tax free.
  4. Apply the rate. 18% within your basic rate band, 24% above it.

Keeping gains tax free

Shares held in a stocks and shares ISA or a pension are outside capital gains tax, so using your ISA allowance shelters future gains. You can also transfer shares to a spouse or civil partner tax free, using both annual exempt amounts, and time disposals across tax years to use two years of allowance.

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Frequently asked questions

Do I pay capital gains tax on shares?

Yes, on the profit when you sell shares held outside an ISA or pension, above the £3,000 annual exempt amount, at 18% or 24% depending on your income.

Are ISA shares free of capital gains tax?

Yes. Shares held in a stocks and shares ISA, or in a pension, are outside capital gains tax, so gains and dividends within them are tax free.

How do I work out the gain when I bought at different prices?

Shares of the same class in the same company are pooled and given an average cost. Special matching rules apply for shares bought and sold within 30 days.

How can I reduce capital gains tax on shares?

Use your annual exempt amount, hold shares in an ISA or pension, transfer to a spouse to use both allowances, and spread disposals across tax years.

When do I report a share gain?

On your Self Assessment return for the tax year of the sale, and you pay the tax by 31 January. There is no 60 day rule for shares, unlike residential property.