A Basic Capital Gains Tax Calculation: A Case Study

Tax in ActionCapital Gains Tax (CGT)
Fatima sold some shares in a company this year and made a profit. Let's walk through how she calculates her Capital Gains Tax liability.

Fatima is a higher-rate taxpayer. She bought shares a few years ago for £10,000 and sold them this year for £25,000.

Step 1: Calculate the Capital Gain

First, we work out the total profit, or 'gain', from the sale.

  • £25,000 (Sale Price) - £10,000 (Purchase Price) = £15,000 (Total Gain)

Step 2: Deduct the Annual Exempt Amount

Every individual has a tax-free allowance for capital gains. For the 2024/25 tax year, this is £3,000. Fatima deducts this from her gain.

  • £15,000 (Total Gain) - £3,000 (Annual Allowance) = £12,000 (Taxable Gain)

Step 3: Apply the Correct Tax Rate

The rate of CGT on shares depends on your income tax band. As Fatima is a higher-rate taxpayer, her gain is taxed at 20%.

  • £12,000 (Taxable Gain) × 20% = £2,400

Final Result

Fatima's final Capital Gains Tax using our Capital Gains Tax calculator bill is £2,400. She would report the sale on the Capital Gains (SA108) pages of her tax return.

How useful was this article?
☆
☆
☆
☆
☆

Looking for something else?

Just browsing? Return home for a list of all articles.