How UK CGT works in 2024-25
Capital Gains Tax is paid on gains when you sell assets outside an ISA or pension wrapper. HMRC sets the annual exempt amount each tax year, the 2024-25 figure is £3,000, down from £12,300 just two years earlier. For shares and funds, basic-rate taxpayers pay 10% on gains above the allowance, higher and additional-rate taxpayers pay 20%. For residential property (other than your main home), the rates are 18% and 24%. Losses can be offset against gains in the same year and carried forward.
You sell shares for £15,000 that cost £8,000, a gain of £7,000. Subtract the £3,000 annual exemption, leaving £4,000 taxable. As a higher-rate taxpayer, you owe 20%, that is £800. The same trade inside a Stocks and Shares ISA: £0 tax. This is exactly why most UK investors fill the ISA first and only spill into a general investment account once the £20,000 is used.
Selling all gains in one tax year. The £3,000 exemption is per year, not per transaction. Spread disposals across 5 April to use the allowance twice in a few weeks. This is called ‘bed and ISA’, sell in a GIA and rebuy inside the ISA.
A 60-second lesson on this, with a worked drill, lives inside the Finlo app. Free, forever, on the basics.