Capital Gains Yield Calculator
Calculate capital gains yield — the return from price appreciation alone.
What this calculator does
Capital gains yield reduces an investment's return to a single component: what the price did. It is current or sale price minus purchase price, divided by purchase price, with all income deliberately excluded.
That narrowness is deliberate. Total return tells you how much you made overall; capital gains yield tells you how much came from the market revaluing the holding rather than from cash it paid you. The calculator returns the gain in pounds, the yield as a percentage, and an annualised equivalent for periods of any length.
When to use it
Use it when the two halves of a return need separating. Judging whether a high-yielding FTSE share has actually grown or merely paid you out of a stagnant price, assessing a growth holding that pays no dividend, or comparing the two on a like-for-like basis all require the price component on its own.
It is equally a tax planning tool. Capital gains yield is the part of your return that remains unrealised and untouched by HMRC until you sell, making it the figure to watch when timing disposals against the CGT annual exempt amount across tax years.
Understanding the inputs
Purchase price is what you paid per share, or your total cost including dealing commission and stamp duty reserve tax if you prefer to work with the whole holding. Use adjusted prices where consolidations or splits have occurred.
Current or sale value is today's price or your disposal price. Do not add dividends here — including them converts the figure into a total return and destroys the distinction the measure exists to draw. Holding period in years drives only the annualised output, and decimals are accepted, so nine months is 0.75.
How is this calculated?
Capital Gains Yield = (Current Price − Purchase Price) / Purchase Price × 100
A worked example
Suppose you bought at £24.60 and the shares now trade at £27.85, three years later. The capital gains yield is £3.25 divided by £24.60, which is 13.21 percent — an annualised 4.2 percent.
Set that beside the income. If the company paid 88p per share annually, that is roughly 3.6 percent a year against your purchase price, lifting total return to around 7.8 percent annually. Held outside an ISA, the dividends were taxed each year while the £3.25 of growth stays untouched until you dispose of the shares.
Limitations and assumptions
The measure is incomplete by design and should never be used on its own to compare holdings with different income profiles. It is also strictly backward-looking: past price growth does not predict future growth, and the calculator assumes a flat return with no volatility whatsoever.
It ignores platform fees, dealing costs, foreign exchange movement on overseas holdings, and any eventual CGT. None of this is investment advice or a personal recommendation. Where a substantial unrealised gain is driving a decision to sell, take advice from an FCA-authorised adviser or an accountant first.
Common Questions
- What is capital gains yield?
- It is the price growth of a holding expressed as a percentage of what you paid, and nothing more. Current price less purchase price, divided by purchase price. Dividends, coupons, and distributions are excluded on purpose — the whole point is to isolate the contribution made by the price itself.
- How does it differ from total return?
- Total return is capital gains yield plus income yield. A share bought at £10 now trading at £11.20 while paying 30p in dividends has a capital gains yield of 12 percent and a total return of 15 percent. Treating the two as interchangeable is the commonest mistake in comparing holdings.
- Why separate price growth from income at all?
- Because HMRC treats them differently and so should you. Dividends are taxed in the year received against the dividend allowance; capital growth is only assessed for CGT when you dispose of the holding. Knowing which half of your return is which is what makes sensible tax planning possible.
- Can capital gains yield be negative while total return is positive?
- Frequently. The UK market is unusually income-heavy, so a share falling 2 percent in price while paying a 6 percent dividend has a capital gains yield of minus 2 percent and a total return of plus 4 percent. Price charts of FTSE 100 income stocks routinely mislead for exactly this reason.
- How does this connect to my CGT bill?
- The capital gains yield is the untaxed portion of your return until you sell. On disposal, the gain counts against the CGT annual exempt amount, which has been reduced considerably in recent years. Anything above the exempt amount is taxable at the share rates for your income tax band.
- How do I annualise a capital gains yield?
- Raise the growth factor to the power of one divided by the years, then subtract one. A 40 percent gain over five years is 1.40 to the power 0.2 minus 1, or 6.96 percent a year. Entering the holding period above produces this figure automatically alongside the raw yield.
- Does buying inside an ISA change the calculation?
- Not the arithmetic, but it changes what the number means to you. Inside a Stocks and Shares ISA there is no CGT on the gain and no tax on dividends, so the capital gains yield is entirely yours. Outside a wrapper, part of any realised gain goes to HMRC.
- Should I include stamp duty in the purchase price?
- Yes, if you want a true measure of what you earned on money committed. Stamp duty reserve tax at 0.5 percent applies to electronic purchases of UK shares. On a £20,000 purchase that is £100, which meaningfully dents the yield on a short holding period though it fades on a long one.
- Does this work for investment trusts?
- It does, but remember the discount or premium to net asset value moves independently of the underlying portfolio. A trust's capital gains yield blends the NAV performance with any narrowing or widening of the discount, so a poor yield may reflect sentiment about the trust rather than the assets it holds.
Related calculators
- Dividend Yield CalculatorCalculate dividend yield and annual income from dividend-paying stocks.
- Holding Period Return CalculatorCalculate total return for any investment holding period.
- Stock Investment Return CalculatorCalculate total return on a stock investment including dividends and capital gains.