How UK tax on profits from shares works

Disclaimer: The information in this article is for reference purposes only. Wise does not offer to buy or sell stocks, and all information on this page should not be considered financial or tax advice. You are also solely responsible for calculating and paying your tax liabilities depending on the applicable law. All investment decisions and tax saving strategies should be made after thorough research and consultation with a qualified financial advisor. Remember that investments, even in low-risk funds, are never guaranteed and your capital is at risk.

About to sell an investment? Whether its stocks and shares, trusts, funds, bonds or gilts, you’ll need to know about any potential tax implications.

In this guide, we’ll run through the essentials you need to know about how UK tax on stocks and shares profits works. This includes who has to pay tax, how much profit on shares is tax-free, rates and how to calculate your tax liability.

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Capital at risk. Growth not guaranteed. Wise Assets UK Ltd is authorised and regulated by the Financial Conduct Authority with registration number 839689. When facilitating access to Wise investment products, Wise Payments Ltd acts as an Introducer Appointed Representative of Wise Assets UK Ltd. Please be aware that we do not offer investment advice, and you may be liable for taxes on any earnings. If you’re uncertain, we urge you to seek professional advice. To find out more about the Funds, visit our website.

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How UK tax on stocks works

UK tax rules apply both when buying and selling certain kinds of investments. When you buy shares, you’ll usually pay a tax known as stamp duty of 0.5%.¹

When you sell shares and you’ve made a profit on your investment, a different type of tax may be charged. This is known as Capital Gains Tax or CGT.

You may have to pay CGT if you make a profit when selling the following investments:

• Shares (not held in an ISA)
• Units in a unit trust
• Some types of bonds (not Premium Bonds or Qualifying Corporate Bonds).

Crucially, CGT is only charged on the amount of profit you’ve made since buying the shares - not on the total value of the investment.

There are a number of exemptions though, and everyone gets a Capital Gains Tax allowance each year. This is the amount you can earn in investment profits before you need to start paying tax.

Learn more about how tax works when transferring shares to a broker overseas in our article below.

📚 Tax when transferring shares overseas

Who needs to pay capital gains tax when selling investments?

Most UK taxpayers will need to pay CGT when selling investments, except in cases where no profit was made.

However, you won’t have to pay the tax if any of the following are true:²

• You’re selling shares held in an ISA or employer Share Incentive Plan (SIP)
• You’re selling UK government gilts or Premium Bonds
• You’re selling Qualifying Corporate Bonds or employee shareholder shares (although it may depend when you got them)
• You’re giving shares as a gift to your spouse, civil partner or a charity.

How much profit on shares is tax free?

Every UK taxpayer gets an annual Capital Gains Tax allowance. This is the amount you can earn in profits from selling investments, as well as real estate, business assets and valuable personal possessions.

For the 2025/26 tax year, the Capital Gains Tax allowance is £3,000, or £1,500 for trusts.³

How to work out your tax liability when selling investments

Tax can be very complicated, so it could be a good idea to seek some professional help before selling investments. This can help you understand the implications of selling shares, calculate what tax you owe, and help you report and pay it.

But generally speaking, all you need to do to calculate your tax liability when selling investments is work out your profit - this is known as a ‘gain’ for tax purposes.

Deduct your annual CGT allowance from that, and whatever’s left is the taxable amount. You’ll apply the CGT rate to this (more on rates next) and this is the amount you need to pay - unless you qualify for any kinds of tax relief or other exemptions.

Luckily, the UK Government also has a Capital Gains Tax calculator tool you can use to make it easier.

UK tax rates for shares profits

Capital Gains Tax rates vary depending on whether you’re a basic rate or higher rate taxpayer for Income Tax:⁴

• Basic rate - CGT rate is 32% on gains from ‘carried interest’ if you manage an investment fund, or 18% otherwise
• Higher rate - CGT rate is 32% on gains from ‘carried interest’ if you manage an investment fund, or 24% otherwise.

How and when is tax paid when selling shares?

HM Revenue & Customs (HMRC) doesn’t send you a bill for Capital Gains Tax, so you’ll need to report it yourself.

If you already submit a Self Assessment tax return, you can include any CGT you owe there - and pay what you owe along with other taxes. You’ll need to do it for the tax year after you sold your shares.

Otherwise, you can report and pay CGT owed using the ‘real time’ Capital Gains Tax service.

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Another alternative to share dealing is Wise Interest, available with the Wise account. It lets you earn returns in GBP, USD and EUR by investing in a fund that holds government-guaranteed assets - all while retaining easy access to your money. You may have to pay tax on your earnings — for example, capital gains tax.

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Capital at risk. Growth not guaranteed. Wise Assets UK Ltd is authorised and regulated by the Financial Conduct Authority with registration number 839689. When facilitating access to Wise investment products, Wise Payments Ltd acts as an Introducer Appointed Representative of Wise Assets UK Ltd. Please be aware that we do not offer investment advice, and you may be liable for taxes on any earnings. If you’re uncertain, we urge you to seek professional advice. To find out more about the Funds, visit our website.

You can even use a Wise account to help you avoid hidden fees when funding your global portfolio.

By strategically holding your international funds in a Wise account until you are ready to invest, you can take advantage of favourable exchange rates by setting up a rate alert and maximise the capital that reaches your international portfolio.

Sources used:

1. GOV.UK - tax when you buy shares
2. GOV.UK - tax when you sell shares
3. GOV.UK - Capital Gains Tax allowances
4. GOV.UK - Capital Gains Tax rates

Sources last checked on date: 29-Aug-2025