How Capital Gains Tax is calculated
Capital Gains Tax is charged on the profit you make when you dispose of an asset that has increased in value. A disposal includes selling, gifting, transferring, or exchanging an asset. You do not pay CGT on assets held within an ISA or pension, on your main home (subject to Private Residence Relief), on ISA holdings, or on certain other exempt assets such as UK government gilts.
Calculate the gain
The gain is sale proceeds minus the original cost of the asset. You can also deduct allowable costs: buying and selling fees (broker commissions, solicitor fees, stamp duty on purchase), and for property, the cost of capital improvements such as extensions. You cannot deduct maintenance costs or mortgage interest from a CGT calculation.
Deduct the annual exempt amount
Each individual has a £3,000 annual exempt amount for 2026/27, which means the first £3,000 of net gains in the tax year is free from CGT. This cannot be carried forward to future years if unused. If you have made multiple disposals in the same tax year, you need to aggregate the gains and losses before applying the exemption.
Apply the correct rate
The rate depends on your total income for the year. Gains that fall within the unused basic rate band (income below £50,270) are taxed at 18%. Gains that push you into the higher rate band are taxed at 24%. If you are already a higher rate taxpayer, all your gains are taxed at 24%. Note that from October 2024, residential property CGT rates were cut from 18%/28% to 18%/24%, aligning them with other assets.
Report and pay
For residential property disposals, you must report and pay any CGT within 60 days of completion using HMRC's online service. For other assets, CGT is reported via your self assessment return and paid by 31 January following the end of the tax year. If you make a loss on a disposal, you can offset it against gains in the same year or carry it forward to future years.
| Taxpayer band | Asset type | CGT rate |
|---|---|---|
| Basic rate | Shares, funds, other assets | 18% |
| Higher / additional rate | Shares, funds, other assets | 24% |
| Basic rate | Residential property | 18% |
| Higher / additional rate | Residential property | 24% |
| Any rate | Annual exempt amount | 0% (first £3,000) |
Business Asset Disposal Relief (formerly Entrepreneurs' Relief) reduces CGT to 14% on qualifying business disposals up to a lifetime limit of £1 million. It applies to sole traders, business partners, and company directors with at least 5% shareholding. This relief is not included in the calculator above and requires separate advice.
What your results mean
If you sold shares or other non-property assets, the CGT due is reported on your self assessment return and paid by 31 January following the end of the tax year. For 2026/27 gains, that means paying by 31 January 2027.
If you sold a residential property (other than your main home), the rules are stricter. You must report and pay CGT within 60 days of completion using HMRC's online Capital Gains Tax on UK property service, even if you also file a self assessment return. Failing to report within 60 days results in automatic penalties.
If your disposal resulted in a loss, you should still report it to HMRC so the loss can be registered and carried forward against future gains. Losses do not expire as long as they are reported within four years of the end of the tax year in which the disposal occurred.
Frequently asked questions
Usually no. Private Residence Relief (PRR) exempts any gain on the disposal of your main home from CGT, provided you lived there throughout the entire period of ownership. If you were absent for periods, for example, letting the property, working abroad, or living elsewhere, only the portion of the gain relating to periods of occupation is exempt. The final nine months of ownership always counts as a period of deemed residence regardless of whether you were actually living there.
Not directly, but you can transfer assets to a spouse or civil partner before disposal. Transfers between spouses and civil partners who are living together are treated as a no-gain, no-loss disposal, meaning no CGT arises on the transfer itself. The receiving spouse then owns the asset at its original cost and can sell it using their own annual exempt amount and basic rate band. This is one of the most commonly used and legitimate forms of CGT planning for married couples.
HMRC uses what is called the Section 104 pool (or share pool) for shares of the same class in the same company. All shares of a given type are pooled together and their total cost is averaged. When you sell some shares, the allowable cost is calculated as a proportional share of the total pool cost. This means you cannot cherry-pick specific lots bought at a higher price to minimise your gain. There are also special rules for shares bought in the 30 days after a sale, known as the bed-and-breakfast rule, which prevents artificial loss creation.
Allowable costs for property CGT include: the original purchase price, stamp duty land tax paid on acquisition, solicitor and surveyor fees on purchase and sale, estate agent fees on sale, and capital improvement costs such as extensions, loft conversions, or a new kitchen (where none previously existed). You cannot deduct routine maintenance and repairs, mortgage interest, insurance, or letting agent fees, those are deductible against rental income instead. Keeping records of all capital expenditure from the moment you purchase an investment property is important.
Yes. HMRC treats cryptocurrency as a capital asset, not as currency. Disposing of crypto, including selling for cash, exchanging one crypto for another, spending it on goods or services, or gifting it (other than to a spouse) is a taxable disposal for CGT purposes. The same pooling rules that apply to shares apply to each type of cryptocurrency. HMRC has increased scrutiny of crypto gains significantly in recent years and has data-sharing agreements with major exchanges. The £3,000 annual exempt amount applies to crypto gains in the same way as any other asset.
Related calculators
Tax Toolkit UK provides free calculators for guidance purposes only. Results are estimates based on HMRC rates for the 2026/27 tax year. Individual circumstances vary. Always consult a qualified tax adviser before making financial decisions.