Capital gains tax on shares and the 30 day trap
Sell shares for more than they cost you and the gain above your £3,000 allowance is taxed at 18% or 24%, depending on where you sit against the basic rate band. Simple enough. What is not simple is the phrase “more than they cost you”, because for shares, cost is defined by matching rules most investors have never heard of, and one of them, the 30 day rule, rewrites gains for anyone who sells and rebuys the same holding.
Which shares are even taxable
Start by excluding the shelters. Anything inside an ISA or a pension is outside capital gains tax entirely, no reporting, no allowance used. Gilts are exempt. What is left, the general investment account, the employee shares you kept, the inherited portfolio, is where the rules below live, and GOV.UK’s shares guidance is the official map.
The matching rules that define your cost
You do not choose which of your shares you sold. HMRC’s share identification rules impose the order: shares bought the same day are matched first, then shares bought in the following 30 days, then everything else at the average cost of your pooled holding, the section 104 pool.
The 30 day rule is the one with teeth. It exists to stop bed and breakfasting, the old practice of selling on Friday and rebuying on Monday to bank a loss while keeping the position. Sell at a loss and rebuy within 30 days and your sale is matched against the new purchase, not the pool, and the loss you intended usually shrinks or vanishes into the new holding’s cost. Investors doing routine rebalancing trip this constantly without knowing it, and monthly investment plans walk into it on schedule. Crypto runs on the same machinery, where we see the damage weekly, our crypto gains guide covers that side.
The pool itself carries its own trap for long holders. Your average cost includes every purchase, every reinvested dividend, every corporate action back to the beginning, and when brokers change or platforms migrate, that history is what goes missing. A pool rebuilt from partial records nearly always understates cost, which means overstated gains, which means overpaid tax.
Costs you can add, income you must not forget
Dealing fees and the stamp duty paid on purchases go into your cost. On the other side, accumulation fund units reinvest income that you were taxed on as income at the time, and that reinvested amount adds to your base cost too. Miss it and you pay tax twice on the same money, once as income when it accrued, again as gain when you sell. Anyone holding accumulation funds for a decade outside a wrapper almost certainly has a base cost higher than their platform reports.
Reporting
Gains above £3,000, or total proceeds above £50,000 even without taxable gains, go on the capital gains pages of your return. Losses want claiming in the same breath, they expire unclaimed after four years, as covered in yesterday’s post on losses. And the allowance planning that applies everywhere applies here, two spouses, two allowances, transfers between them at no gain, timing across 5 April.
Share tax questions
How much tax will I pay on my shares?
Above the £3,000 allowance, 18% on gains fitting inside your remaining basic rate band, 24% beyond it. The split depends on your income, which is why our calculator asks for it rather than making you guess your band.
Do I pay tax when I transfer shares between brokers?
An in specie transfer, where the shares move without being sold, is not a disposal. Watch the paperwork though, some platforms execute transfers as sell and rebuy, which is two taxable events and possibly a 30 day match.
What about shares from my employer?
Scheme shares have income tax stories of their own on the way in, but once they are yours, sales follow the normal rules here, with base cost depending on the scheme. SAYE and SIP shares moved into an ISA promptly can escape gains tax altogether.
I have no record of what I paid in 2009. What now?
The history usually exists somewhere, registrars, old statements, corporate action records, and reconstructing it is genuinely worth it, because the alternative HMRC fallback treats poor records unkindly. Reconstruction is a service we run daily for crypto and the share version is usually easier.
If your platform’s capital gains report was generated after a transfer, a merger or twenty years of accumulation units, treat its cost figures as a rumour. Checking them is what our free review is for.
