Capital gains tax on shares — methodology

What share identification is, and why it is not here

For capital gains tax, shares of the same class in the same company are not individually identifiable. A sale is matched against acquisitions in a fixed statutory order:

1. The same-day rule — shares acquired on the same day as the disposal.
2. The 30-day rule — shares acquired in the 30 days after the disposal. This is the “bed and breakfasting” rule, and it is the reason selling to use up the annual exempt amount and buying straight back does not work.
3. The s104 pool — everything else, held as one asset with one average cost.

pooled cost per share = total cost of the pool ÷ shares in the pool
allowable cost        = pooled cost per share × shares sold
gain                  = proceeds − allowable cost − dealing costs

None of that is done by this page. It taxes a gain you have already worked out, and a tool that quietly ignored the 30-day rule would not be a simplification of the tax — it would be a different and wrong answer. So the limitation is stated beside the input and again directly above the result, rather than only here.

This page used to say the rules were not implemented anywhere in this site’s engines, which was true when it was written and stopped being true on 13 August 2026. packages/tax-core now applies them — the bed and ISA calculator takes a list of purchases and a sale and shows which shares were matched under which rule, at what cost. This page still does not, because its input is a gain rather than a transaction history, and that is a fact about this page rather than about the software.

The calculation this page does perform, in order

1. Start from the gain you entered.
2. Deduct the annual exempt amount, once. What remains is the chargeable gain. The exempt amount does not consume basic-rate band, which is why the exempt slice of a gain never pushes the rest of it into the higher rate.
3. Work out taxable income: income before tax less the personal allowance that actually applies to it. That allowance tapers above £100,000, so this step runs through the income tax engine rather than subtracting a fixed figure.
4. Stack the chargeable gain on top of taxable income. The part landing below the basic-rate ceiling is charged at the basic rate for gains; the rest at the higher rate. One disposal routinely meets both.
5. Gains qualifying for Business Asset Disposal Relief skip the stack entirely and are charged at a flat rate.

chargeable       = max(0, gain − annual exempt amount)
basic-rate room  = max(0, basic-rate ceiling − taxable income)
at basic rate    = min(chargeable, basic-rate room)
at higher rate   = chargeable − at basic rate

Rates and allowances

Capital gains tax is not devolved. The rates, the annual exempt amount and the basic-rate band for gains are the same across the UK; Scottish income tax bands differ but do not change which capital gains rate a gain meets. Residential property is charged at different rates and is not offered by this calculator — the general capital gains tax calculator covers it.

Sources

• gov.uk — Tax when you sell sharesIncluding which shares a sale is matched against, which is the step this calculator does not perform.
• gov.uk — Shares and Capital Gains Tax (HS284)The share identification rules in full: the same-day rule, the 30-day rule and the s104 pool.
• gov.uk — Capital gains tax rates and annual tax-free allowances
• gov.uk — Capital gains tax: rates
• gov.uk — Business Asset Disposal ReliefFor the relief rate and the lifetime limit, which this calculator reports but does not enforce.
• gov.uk — Income tax rates and allowances: current and pastThe personal allowance and the basic-rate band both come from the income tax rules, because a gain is taxed according to the income sitting underneath it.

Three limits that change the answer, stated here rather than buried

• The gain is yours to work out, and for shares that is where it usually goes wrong. This page taxes the figure you enter and does not derive it: there is no share matching, no same-day rule, no thirty-day rule and no s104 pooling. Enter a proceeds-less-what-you-paid figure where HMRC expects a pooled one and every number the calculator produces is arithmetic on the wrong input.
• A full annual exempt amount is deducted on every run. The exemption is annual and this calculation is a single disposal, so a reader with other chargeable gains in the same tax year has already spent part or all of it and the figure shown is too low. Running the page once per disposal and adding the answers deducts the exemption once per run, which is the same error in a more convincing shape.
• The Business Asset Disposal Relief lifetime limit is not applied. The relief is capped across every qualifying disposal you have ever made, and this calculator has no record of your earlier claims. If those claims have already used the cap, gains above it are charged at the ordinary rates and the figure shown is too low. Keep your own running total.