Capital gains tax (CGT) is charged on the profit when you sell or give away something that has gone up in value, such as a buy-to-let, a second home or shares. It is the gain that is taxed, not the sale price. Here is how the calculator works it out for the 2026/27 tax year.
The calculation, step by step
- Work out the gain. Sale price minus purchase price.
- Take off allowable costs. Buying costs such as legal fees and stamp duty, selling costs such as agent fees, and capital improvements like an extension. Repairs do not count.
- Take off any relief. If the property was ever your main home, Private Residence Relief covers the time you lived there plus the last 9 months.
- Take off losses and the allowance. Losses from the same tax year come off first, then the £3,000 annual exempt amount.
- Apply the rate. Add the taxable gain on top of your taxable income. The part that fits in your basic rate band is taxed at 18%. The rest is taxed at 24%.
A worked example
You bought a buy-to-let for £200,000 and sell it for £280,000. Your salary is £45,000.
| Gain | £80,000 |
| Less annual exempt amount | £3,000 |
| Taxable gain | £77,000 |
| £5,270 at 18% | £948.60 |
| £71,730 at 24% | £17,215.20 |
| Capital gains tax | £18,163.80 |
Why only £5,270 at 18%? After the £12,570 personal allowance, your salary uses £32,430 of the £37,700 basic rate band, which ends at £50,270 of income. Only what is left of the band is taxed at the lower rate.
Now add £12,000 of costs: £8,000 of stamp duty, legal fees and survey when you bought it some years ago, and £4,000 of agent and legal fees when you sold. The tax falls to £15,283.80, a saving of £2,880. Keep the paperwork.
Capital gains tax on shares
Since 30 October 2024, shares and funds have been taxed at the same 18% and 24% rates as property, so the calculator handles both. The harder part with shares is the cost. Shares of the same company are matched in a fixed order: first with any bought on the same day, then with any bought in the following 30 days, and then with your Section 104 pool at its average cost.
Say you bought 1,000 shares for £4,000 and later another 1,000 for £6,000. The pool holds 2,000 shares costing £10,000, an average of £5 each. Sell 1,000 for £9,000 and the cost is £5,000, a gain of £4,000 before fees. Broker fees and the stamp duty paid when you bought count as costs.
Shares held in an ISA are free of capital gains tax, and so are UK government gilts. Business Asset Disposal Relief, for qualifying business disposals, is not modelled here.
Property: the 60-day rule and joint owners
Sell a UK residential property that is not your main home and there is tax to pay, and you must report and pay within 60 days of completion through a Capital Gains Tax on UK property account. You still include the sale on your Self Assessment return if you file one. Our guide to CGT when you sell a rental property walks through the deadline and the forms.
Joint owners each pay on their own share. Married couples and civil partners can usually pass assets between them free of CGT, which lets both use their allowance and their basic rate band. The calculator's joint option doubles the allowance to £6,000 but applies your income to the whole gain. If your partner pays less income tax, the real saving can be bigger. For an exact figure, run the calculator once for each owner with half the prices and that person's income.
Common mistakes
- Deducting repairs. Only improvements such as an extension count. Decorating and other normal maintenance do not.
- Forgetting the gain stacks on your income. A basic-rate taxpayer can still pay 24% on most of a large gain.
- Missing the 60-day deadline. HMRC can charge interest and a penalty.
- Not reporting a sale with no tax due. If you are in Self Assessment, you usually still report gains when your total sale proceeds for the year are over £50,000.
- Losing losses. A capital loss must be claimed within 4 years of the end of the tax year you made it, or it cannot be set against future gains.
Deciding whether to sell at all? See how to decide whether to hold or sell, and if you are weighing a move into a company, the numbers behind incorporating.
This guide is for information only and is not tax or financial advice. Tax rules change, so check current rates and allowances on GOV.UK, and take independent advice before you sell.
