Understanding the 2023/24 Capital Gains Tax Allowance

Charlotte Baroukh

Tax Expert @ Pie

6 min read

Did you know that the Capital Gains Tax allowance was cut in half for 2023/24, and is now £3,000 for 2026/27?

Well, now you do... every day is a school day! Pretty big change, right? Whether you're a pro investor or just getting started, the current allowance affects your pocket. The good news?

There are smart ways to handle these changes and keep your finances healthy.

Let's figure this out together.

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What Was the Capital Gains Tax Allowance for 2023/24, and What Is It Now?

Capital Gains Tax (CGT) is the tax you pay on the profit, or gain, when you sell or give away an asset that has gone up in value, such as shares. You pay it on the gain, not on the full sale price.

For 2023/24 the Capital Gains Tax allowance, officially called the annual exempt amount, was set at £6,000. That was roughly half of the £12,300 available in 2022/23. It was then halved again and has stayed at £3,000 ever since:

2022/23: £12,300
2023/24: £6,000
2024/25: £3,000
2025/26: £3,000
2026/27: £3,000

The allowance applies per person, per tax year, which runs from 6 April to 5 April. Any part you don't use is lost at the end of the tax year and can't be carried forward. Most trusts get half the individual amount, which is £1,500.

Here's how it works today. If you sell shares in 2026/27 for a £10,000 gain, the first £3,000 is tax-free and £7,000 is taxable. In 2023/24 the same gain would have left £4,000 taxable, because the allowance was £6,000.

Who Does the CGT Allowance Affect?

The CGT allowance applies to gains on most chargeable assets. These include shares and funds held outside a tax wrapper, UK residential property that isn't your home, cryptoassets and valuable possessions.

Some investments are outside CGT altogether, so gains on them don't use up your allowance:

Shares and funds held in an ISA or a pension
UK government gilts and qualifying corporate bonds
Shares you give to a UK charity
Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) shares, where the scheme conditions are met
Your main home, which is usually covered by Private Residence Relief

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If you sell shares in your own trading company, Business Asset Disposal Relief may reduce the rate you pay. It is subject to a £1 million lifetime limit and strict qualifying conditions.

Married couples and civil partners each get their own £3,000 CGT annual exempt amount. Assets can usually pass between spouses on a no gain, no loss basis, so a couple can shelter up to £6,000 of gains a year between them.

Dividends: A Separate Allowance on Shares

The CGT allowance only covers profits when you sell. Dividends paid while you hold shares fall under the separate dividend allowance, which has been £500 since 2024/25. For 2026/27, dividends above this are taxed at 10.75% for basic rate taxpayers, 35.75% for higher rate taxpayers and 39.35% for additional rate taxpayers.

Dividends sit on top of your other income, and gains sit on top of both, so your earnings decide which rates apply. For sole traders, claiming every self-employed tax allowance you're entitled to lowers your taxable profit and can leave more of the basic rate band for share gains.

If you're retired, your pension income uses up your allowances first. Our guide to the personal tax allowance for pensioners explains how that works before any gains are added.

Understanding CGT's interaction with other taxes matters too. For example, the 0.5% Stamp Duty you pay when buying UK shares counts as an allowable cost when you later work out your gain.

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How to Calculate Capital Gains Tax on Shares

Working out CGT on shares comes down to four steps:

Work out each gain: the sale proceeds, minus what you paid, minus allowable costs such as dealing fees and Stamp Duty.
Add up your gains for the tax year. Deduct any losses from the same year first, then any losses brought forward from earlier years.
Subtract the Capital Gains Tax allowance, which is £3,000 for 2026/27.
Add the remaining taxable gain to your taxable income to see which rate applies.

For 2026/27, gains on shares are taxed at 18% where they fall within the basic rate band and 24% above it. Since 30 October 2024, these rates have been the same as the rates on residential property.

Example: Sam earns a salary of £40,000 in 2026/27 and sells shares for a £20,000 gain after costs. After the £12,570 personal allowance, Sam's taxable income is £27,430. That leaves £10,270 of the £37,700 basic rate band unused. Sam's gain less the £3,000 allowance is £17,000. The first £10,270 is taxed at 18% (£1,848.60) and the remaining £6,730 at 24% (£1,615.20), so Sam owes £3,463.80.

The most common pitfall is forgetting that a gain can push part of it into the higher rate. Always check how much of your basic rate band your income has already used.

Share Matching Rules: Which Shares Did You Sell?

If you bought the same company's shares at different times, HMRC's matching rules decide which purchase cost you use. They apply in this order:

Same day rule: sales are first matched with shares bought on the same day.
30-day rule: next, sales are matched with shares bought in the 30 days after the sale. This stops you selling and immediately buying back just to use the allowance.
Section 104 pool: all other shares are held together at an average cost.

Example: you buy 1,000 shares for £2,000 and later another 1,000 for £4,000. Your pool holds 2,000 shares costing £6,000, an average of £3 each. If you sell 500 shares for £2,500, your cost is £1,500 and your gain is £1,000 before fees.

Reporting and Paying CGT on Shares

You must report if your taxable gains are above the £3,000 allowance. If you're registered for Self Assessment, you must also report if you sold assets worth more than £50,000 in total, even if no tax is due.
If you're not already in Self Assessment, register by 5 October after the end of the tax year. Alternatively, you can report the gain using HMRC's real time Capital Gains Tax service. To have the tax collected through your tax code, report by 31 December after the tax year ends.
File your return and pay any tax by 31 January after the end of the tax year. For 2026/27, that is 31 January 2028.
To use a loss in a later year, claim it within four years of the end of the tax year in which you made it.

In the Pie Tax app, you can record each share sale with its date, proceeds and costs alongside your trading or rental income. Pie Tax adds the gain to your real-time tax estimate, so you can see the effect before 5 April, and includes it when you file your Self Assessment return to HMRC.

Strategies to Maximise Your CGT Allowance

Timing is crucial. Spreading asset sales across tax years can be a game-changer.

Splitting a sale across two years can use two £3,000 allowances, saving up to £720 at the 24% rate.

Tax-efficient vehicles like ISAs and pensions are goldmines. Many investors shelter investments from CGT this way.

Offsetting gains with losses is another strategy we frequently employ. It's surprising how many clients forget about those old, underperforming shares!

For couples, transferring assets between spouses or civil partners can effectively double the allowance.

Remember, it's not just about reducing tax - it's about smart financial planning.

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What Has Changed Since 2023/24

The CGT allowance is only part of the story. Several changes since 2023/24 affect chargeable gains on shares in the 2026/27 tax year:

Allowance: cut to £3,000 from 6 April 2024 (it was £6,000 for 2023/24), and it is still £3,000 for 2026/27.
Rates on shares: rose from 10% and 20% to 18% and 24% for disposals made on or after 30 October 2024, and these rates still apply in 2026/27.
Residential property: the higher rate of CGT on gains fell from 28% to 24% from 6 April 2024 (and remains 24% in 2026/27), so residential property gains and share gains now share the same CGT rates.
Business Asset Disposal Relief (formerly Entrepreneurs' Relief): the rate rose from 10% to 14% for 2025/26 and to 18% from 6 April 2026.

Investors' Relief: the lifetime limit was cut from £10 million to £1 million, and it now uses the same rates as Business Asset Disposal Relief.
Carried interest: from 6 April 2026 it is taxed under the income tax rules rather than as a capital gain.

Planning Points for 2026/27

With a smaller allowance and higher rates, it is worth reviewing your holdings well before each 5 April:

Bed and ISA: sell shares held outside an ISA and buy them back inside one, using up to £20,000 of your annual ISA allowance. Future gains and dividends are then tax-free.
Use both allowances: spouses and civil partners can transfer assets to each other before a sale, so both £3,000 allowances and both basic rate bands can be used.
Claim your losses: report losses within four years so they can be set against future gains.
Spread large sales: selling across two tax years gives you two allowances and may keep more of the gain at 18%.

Don't forget to reassess your personal possessions too. Items sold for £6,000 or less are usually exempt. Above that, gains are taxable, but the gain is capped at 5/3 of the excess over £6,000.

International Aspects of Capital Gains Tax

International CGT has evolved into a complex web of cross-border considerations.

For non-UK residents, disposals of UK property must be reported to HMRC within 60 days of completion, while overseas asset taxation requires navigation of both UK and local laws.

The strategic use of double taxation agreements can significantly reduce tax liabilities, though these opportunities are often underutilised in tax planning.

Understanding how these agreements interact with local tax systems could be the key to optimising your international tax position.

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Digital Assets and CGT: Navigating the New Frontier

We've seen digital assets turn the CGT world upside down.

Our clients' questions about cryptocurrencies and NFTs have skyrocketed.

HMRC's view of crypto as property, not currency, has led to some interesting tax scenarios we've had to navigate.

Valuation has been our biggest challenge, especially with NFTs.

We've also noticed HMRC becoming increasingly savvy at tracking crypto transactions.

Our digital asset investors have learned the hard way that meticulous record-keeping is non-negotiable.

We've helped clients avoid significant CGT pitfalls in this complex area.

Our advice? Stay informed and prepared.

In this rapidly evolving tax landscape, we're here to help you stay ahead of the curve.

Final Thoughts

The 2023/24 Capital Gains Tax allowance of £6,000 was the first big cut, and the allowance has been £3,000 since 6 April 2024. Understanding the limits, working out your gains correctly and using the planning points above can keep more of your profits tax-free.

Tax efficiency is an ongoing process, not a one-off job. Pie Tax keeps your income, gains and real-time tax estimate in one place, so you can see what you owe well before the 31 January deadline.

Ready to take the stress out of your next return? Try Pie Tax for free.

Frequently Asked Questions

What is the tax-free allowance on shares for 2026/27?

For 2026/27 you can make £3,000 of capital gains on shares tax-free under the Capital Gains Tax annual exempt amount. Dividends have a separate £500 dividend allowance. Shares held in an ISA or pension are completely free of Capital Gains Tax and dividend tax.

What rate of Capital Gains Tax do I pay on shares?

Gains above the £3,000 allowance are taxed at 18% where they fall within your basic rate band and 24% above it. These rates have applied to shares since 30 October 2024. Your gain is added on top of your other taxable income to decide which rate applies.

Do I need to report selling shares if my gain is under £3,000?

Usually not, unless you're registered for Self Assessment and sold assets worth more than £50,000 in total during the tax year. In that case, HMRC expects the disposals on your return even if no tax is due. You should also report a loss if you want to use it against future gains.

Can I carry forward my unused Capital Gains Tax allowance?

No. The annual exempt amount is lost if you don't use it by 5 April. Capital losses are different: if you claim them within four years, they can be carried forward and set against gains in later years.

Do I pay Capital Gains Tax on shares in an ISA?

No. Gains and dividends on shares held in a Stocks and Shares ISA are tax-free and don't use up your allowances. Many investors move shares into an ISA each year using a Bed and ISA, within the £20,000 annual subscription limit.

Can I give shares to my spouse to save Capital Gains Tax?

Yes. Transfers between spouses and civil partners who live together are on a no gain, no loss basis, so no tax arises on the transfer. Your partner can then sell and use their own £3,000 allowance and, if they pay less tax, possibly the lower 18% rate.

Final Thoughts

Tax efficiency is an ongoing process, not a one-off job. Pie Tax keeps your income, gains and real-time tax estimate in one place, so you can see what you owe well before the 31 January deadline.

Ready to take the stress out of your next return? Try Pie Tax for free.

Understanding the 2023/24 Capital Gains Tax Allowance