Gains and losses on the disposal of shares and securities: formula sheet

Key formulas

Order of matching (individuals)

1st: same day acquisitions; 2nd: acquisitions in the next 30 days (earliest first); 3rd: share pool

Always work in this order. Shares acquired before the disposal go into the pool, not matched individually.

Gain on each matched part

Gain = proceeds of matched shares − cost of matched shares

Proceeds are split in proportion to the number of shares in each match. Add any allowable incidental costs.

Proceeds for a part of the sale

Proceeds of part = total proceeds × (shares in part ÷ total shares sold)

Use this when a sale is matched in more than one way.

Capital gains tax rates and exempt amount

Rates 18% and 24%; annual exempt amount £3,000

Rates are those provided in the ACCA tax tables. The rate depends on how much basic rate band is left after taxable income.

Matching order for individuals

1. Same day 2. Next 30 days (FIFO) 3. Section 104 pool

Apply this order before you touch the pool. Pool shares are those bought before the disposal and not matched by the first two rules.

Cost of shares sold from the pool

Allowable cost = Pool cost × Shares sold ÷ Shares in pool

Use the pool figures immediately before the sale, after any earlier purchases, bonus or rights issues.

Gain on disposal

Gain = Disposal proceeds − Allowable cost

Deduct incidental costs of buying (in pool cost) and selling (from proceeds). A negative result is a loss.

Bonus issue

New number of shares = Old shares + Bonus shares; cost unchanged

For a 1 for 4 bonus issue, you get 1 new share for every 4 held.

Rights issue

New number = Old shares + Rights shares; new cost = Old cost + Cash paid

Shares taken up are added to the pool at the amount paid.

Pool carried forward

Pool c/f = Pool b/f − Shares sold and cost used

Shares left and cost left must both reduce. Check that the cost left is the balance of the cost.

Bonus issue

New shares = old holding × bonus ratio; pool cost unchanged

For a 1 for 4 bonus, you receive 1 new share for every 4 held. Add the shares and add £0 to cost.

Rights issue

New shares = old holding × rights ratio; cost added = new shares × issue price

Add both the shares and the cash paid to the pool.

Cost on disposal from the pool

Cost = shares sold ÷ shares in pool × total pool cost

Use the pool after all bonus and rights issues before the sale date.

Chargeable gain

Gain = disposal proceeds − cost of shares sold

Then deduct losses and the annual exempt amount of £3,000. Rates are 18% and 24%, depending on the taxpayer's income and available basic rate band.

Carry forward

Remaining pool = shares left and cost left (total cost − cost used)

Always show the balance, because later disposals may be tested.

Gilts

Disposal of gilt-edged securities = exempt: no gain, no loss

Applies for individuals. Leave the disposal out of the CGT computation.

Qualifying corporate bonds

Disposal of QCB = exempt: no gain, no loss

Check the question states the bond is a QCB. A convertible bond or a share is not a QCB.

Net chargeable gains

Chargeable gains − allowable losses (chargeable assets only) − annual exempt amount (£3,000)

Exempt assets never enter this calculation. The annual exempt amount is given in the tax rates and allowances.

CGT rates for individuals

18% in the basic rate band, 24% above it

Rates apply to taxable gains on chargeable assets, after the annual exempt amount.

Share for share exchange, shares only

No disposal. New shares cost = old shares cost. Acquisition date = old date.

Applies when the conditions for the relief are met. The gain is deferred, not removed.

Part disposal where cash is received

Cost allocated to cash = Total cost × A ÷ (A + B)

A = cash received. B = market value of the new shares at the date of the exchange. Gain now = A − allocated cost.

Cost carried into new shares

Cost of new shares = Total cost − cost allocated to cash

The new shares keep the original acquisition date.

Gain now (cash element)

Gain = A − Total cost × A ÷ (A + B)

Use the annual exempt amount of £3,000 against total gains of the year. Rates are 18% and 24%.

Qualifying corporate bonds received

Gain on old shares calculated at exchange, using market value of QCBs as proceeds. Gain is deferred until the QCBs are sold.

The gain is frozen at the exchange date. It is taxed when the bonds are disposed of, in that later year.

Negligible value claim loss

Loss = Allowable cost − negligible value at the chosen date

The claim treats you as selling and reacquiring the shares at that value. Your new base cost is the negligible value.

Current-year loss relief

Net gains = Gains − Current-year losses (in full)

Current-year losses are not restricted by the annual exempt amount (£3,000).

Brought-forward loss relief

B/f loss used = Net gains − £3,000 (annual exempt amount), limited to the loss available

Use b/f losses only after current-year losses. Leave gains equal to the annual exempt amount.

Share loss relief against income

Relief against total income of the loss year and/or the previous year

Only for individuals who subscribed for shares in a qualifying unquoted trading company. Subject to the cap: the higher of £50,000 or 25% of income.

Time limit for share loss relief claim

12 months after 31 January following the end of the tax year of the loss

For a 2025/26 loss, the deadline is 31 January 2028.

Quick revision

• Individuals match a sale in this order: same day, then the next 30 days, then the Section 104 pool.
• The pool holds the number of shares and their total cost, updated for each purchase and sale.
• On a part-sale from the pool, cost is the pool cost multiplied by shares sold, divided by shares held.
• A bonus issue adds shares at no cost, so the total pool cost stays the same.
• A rights issue is treated as a purchase at the amount paid, and is added to the pool.
• Gilt-edged securities and qualifying corporate bonds are exempt: no gain is taxable and no loss is allowable.
• Business asset disposal relief and investors' relief both have a £1,000,000 lifetime limit and a 14% rate.
• The annual exempt amount is £3,000, and the main rates are 18% and 24%.
• Set current-year losses against current-year gains before the annual exempt amount.
• A negligible value claim lets you treat the shares as sold and reacquired at their low value, creating a loss.
• Show every working in Section C, because method marks are available.

Common mistakes

• Matching the sale with the pool first Fix: Check same day and the next 30 days before you touch the pool.
• Treating the 30 days as the 30 days before the sale Fix: The 30 days run after the date of disposal. Earlier purchases go into the pool.
• Using the price of the most recent purchase as the cost of shares sold. Fix: Use the average pooled cost: pool cost × shares sold ÷ pool shares. Only same-day and 30-day matches use their own purchase cost.
• Forgetting the same-day and 30-day rules before using the pool. Fix: Always check dates first. Any purchase on the day of sale or in the next 30 days is matched before the pool.
• Adding a cost for bonus shares Fix: Bonus shares are free. Add the shares and £0. The pool cost stays the same.
• Treating a rights issue as a separate purchase Fix: Add the rights shares and the price paid to the pool. They do not form a separate acquisition with their own date.
• Offsetting a loss on a QCB against other gains Fix: Remember that exempt means no gain and no loss. Strike the whole disposal out.
• Taxing a gain on gilts Fix: Check the asset type first, before working out proceeds and cost.
• Taxing the whole exchange as a disposal when only shares are received. Fix: Shares for shares means no disposal. Carry forward the old cost and date.
• Using the wrong B in the fraction. Fix: B is the market value of the new shares received at the date of exchange.

Exam tips

• Draw a timeline of dates first. It shows at once which purchases fall on the same day or within 30 days.
• In objective questions, the trap is usually a purchase just inside or just outside the 30-day window. Count the days carefully.
• In written answers, show each match as its own line with the number of shares, proceeds, cost and gain. This earns method marks.
• Show the proportion working for proceeds. Markers look for it.
• After finding the net gain, state the annual exempt amount of £3,000 and the tax rate used, so you pick up the full marks for the computation.
• Draw the pool table before reading the question twice. The layout earns marks even if one figure is wrong.
• In objective questions, the trap is often a bonus issue or the same-day rule. Check for them first.
• Show the fraction used (sold ÷ held) in Section C workings so the marker can give method marks.