UK Trading Taxes
A beginner-friendly guide to how trading profits are taxed in the UK, including CGT, dividends, and ISA allowances.
Capital Gains Tax (CGT)
When you sell an investment for a profit, you may owe Capital Gains Tax. The annual CGT allowance for 2025/26 is £3,000. Gains above this are taxed at 18% for basic-rate taxpayers and 24% for higher-rate taxpayers.
Dividend Tax
Dividends have a separate tax-free allowance of £500 per year (2025/26). Above that, basic-rate taxpayers pay 8.75%, higher-rate pay 33.75%, and additional-rate pay 39.35%.
ISA Tax Shelter
A Stocks & Shares ISA lets you invest up to £20,000 per tax year with zero tax on gains or dividends. This is the single most important tax-efficient tool for UK investors.
Record Keeping
Keep records of every trade: date, price, quantity, fees. HMRC may request these. Most brokers provide annual tax reports, but you are ultimately responsible for accuracy.
When to Report
If your total gains exceed the CGT allowance, you must report via Self Assessment. Even if you have losses, reporting them lets you carry them forward to offset future gains.
This is educational content only and does not constitute financial advice. Always do your own research before making investment decisions.