Finance⏱ 6 min read
How to Calculate Capital Gains Tax on Shares and Property
CGT is owed when you sell an asset for more than you paid. The rate depends on whether you are a basic or higher rate taxpayer, the type of asset, and allowable costs. Here is the complete calculation.
Capital Gains Tax (CGT) applies to the profit on selling assets outside ISAs — shares, investment property, business assets, and some personal possessions. The rules changed significantly in recent years.
The Basic CGT Calculation
Chargeable gain = Proceeds - Allowable costs
Allowable costs include:
- Original purchase price
- Acquisition costs (stamp duty, solicitor fees, broker fees)
- Enhancement costs (property improvements, not repairs)
- Disposal costs (estate agent fees, legal fees, broker fees)
Example: Shares
Purchase price: £15,000 (including £50 broker fee)
Sale proceeds: £28,000 (minus £75 broker fee)
Net proceeds: £27,925
Allowable cost: £15,000
Chargeable gain: £12,925
Annual CGT Allowance and Tax Rates
Annual Exempt Amount 2024/25: £3,000
(Reduced from £12,300 in 2022/23 — a major change)
Taxable gain = Chargeable gain - Annual Exempt Amount
= £12,925 - £3,000 = £9,925
CGT rates (from October 2024):
For shares and investments:
Basic rate taxpayer: 18% (was 10% before Oct 2024)
Higher rate taxpayer: 24% (was 20% before Oct 2024)
For residential property (not main home):
Basic rate taxpayer: 18%
Higher rate taxpayer: 24%
Basic rate taxpayer tax: £9,925 x 18% = £1,786.50
Higher rate taxpayer tax: £9,925 x 24% = £2,382.00
Determining Your CGT Rate Band
CGT rate depends on whether the gain pushes you into
the higher rate band when added to your income.
Example: £40,000 salary, £12,925 gain
Salary income: £40,000
Higher rate threshold: £50,270
Remaining basic rate band: £50,270 - £40,000 = £10,270
First £10,270 of gain (after allowance):
Taxable gain: £9,925 (after £3,000 allowance)
All within basic rate band: £9,925 x 18% = £1,786.50
Example: £55,000 salary (already in higher rate):
Taxable gain: £9,925
All taxed at 24%: £9,925 x 24% = £2,382.00
CGT on the Family Home (Main Residence Relief)
Your main residence is fully exempt from CGT —
Private Residence Relief (PRR) covers 100% of gains.
Conditions:
- Must have been your main home throughout ownership
- If used partly for business, the business portion may be taxable
- "Garden and grounds" up to 0.5 hectares exempt
- Larger grounds: only exempt if required for use and enjoyment of the house
Letting relief (now very limited):
Was available when letting out former home — now only applies
if the owner was in shared occupancy with the tenant.
Bed and ISA Strategy
To shelter future gains from CGT:
Sell shares outside ISA → crystallise current gain/loss
Immediately repurchase the same shares inside a Stocks & Shares ISA
(Cannot repurchase in same account — this would be "bed and breakfast")
Cost: broker fees for sale and repurchase (£10-£30 total)
Benefit: all future growth sheltered from CGT permanently
With only £3,000 annual CGT allowance, this strategy
becomes increasingly valuable for long-term investors
with substantial gains outside ISA wrappers.