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Working out whether you have to pay Capital Gains Tax

Whether or not you need to pay Capital Gains Tax when you dispose of shares depends on your total gains for the tax year. This includes the gain on the shares and gains on the disposal of any other assets that attract Capital Gains Tax.

Capital Gains Tax is charged on total gains after:

How much Capital Gains Tax will you pay?

This depends on your overall income.

To find out how to calculate Capital Gains Tax and check which other assets attract Capital Gains Tax read the related article by following the link below.

• Capital Gains Tax: the basics

Special rules for working out gains on shares

Shares differ from most other assets that attract Capital Gains Tax because they're not uniquely identifiable. You may buy shares of the same class in one company at different times and at different prices. As a result you have to apply special rules when working out their acquisition cost for Capital Gains Tax purposes.

• Shares and Capital Gains Tax - find out more on the HMRC website Opens new window

Shares through an employee share scheme

Special Capital Gains Tax rules apply to shares bought or acquired through an employee share scheme or as a result of your employment. HM Revenue & Customs (HMRC) approved schemes, such as Share Incentive Plans, approved Save As You Earn (SAYE) schemes, Company Share Option Plans and Enterprise Management Incentives offer tax advantages.

If you follow the rules, you may pay less or no Capital Gains Tax when you sell the shares.

• Download 'Helpsheet 287 - HMRC Employee share and security schemes and Capital Gains Tax' (PDF, 80K) Opens new window

• Help with PDF files

Reporting the sale of shares and paying Capital Gains Tax

If you normally complete a Self Assessment tax return

You must fill in the Capital Gains Tax pages of your return if any of the following apply:

If you do not tell HMRC in time about gains that should be included on your tax return you may have to pay a penalty.

You can find out more about the forms you’ll need and how to file your tax return online or on paper by following the link below.

• How to report a capital gain Opens new window

If you don't normally complete a tax return but Capital Gains Tax is due

• Contact HMRC Opens new window

Selling or giving away shares

Giving away shares or selling them for less than they're worth

If you give shares away - so you get nothing for them - your gain is based on what they're worth. It is the same if you choose to sell them for less than their full value. So you need to work out the gain based on the full value of the shares when you gave them away.

Selling or giving shares to a connected person

If you sell or give the shares to a 'connected person', such as a close relative or a company you control your gain is based on what they’re worth – which is the full value of the shares when you sold or gave them away. But see the next section if the person you're connected to is a husband, wife or civil partner and follow the link below for more on 'connected persons'.

• More on connected persons Opens new window

Selling or giving shares to your spouse, civil partner or children

You don't have to pay Capital Gains Tax if you sell or give shares to your husband, wife or civil partner while you're legally married or in a civil partnership and living together. But if they later sell or give away the shares, they may have to pay Capital Gains Tax on the gain - based on their original cost to you.

There's no special relief if you sell or give shares to your children.

• More about civil partnerships Opens new window

More useful links

• Find out more about tax returns

• Do you need to fill in a tax return?

• How to file your tax return online

• Download 'Helpsheet 284 - Shares and Capital Gains Tax' (PDF, 76K) Opens new window

• Help with PDF files

Useful contacts

• Money, tax and benefits contacts