Taxation (UK) · Chargeable gains for companies

Chargeable Gains on Shares for Companies: Matching and the Share Pool

Updated 11 October 2026 · Fact-checked

For a company, a share disposal is matched first with shares bought on the same day, then shares bought in the previous nine days, then the share pool. Gain = proceeds minus the matched cost. Bonus issues add shares at nil cost, and rights issues add shares and cost. Substantial shareholding exemption can remove the gain entirely.

Understand Chargeable Gains: Shares and Securities

A company that owns shares in another company may sell some of them. The gain is computed under the chargeable gains rules and added to the company's profits for corporation tax. There is no annual exempt amount for companies.

The problem is that shares are identical. If a company bought shares at different times and prices, you must decide which shares it sold. The matching rules decide this. For companies the order is: (1) shares acquired on the same day, (2) shares acquired in the previous nine days, taking the earliest first, (3) the share pool (the Section 104 holding). Many students search for a 10-day rule. That is a different rule. For companies in TX-UK, use the previous nine days.

The share pool holds all other shares of the same class in the same company. You track two things: the number of shares and their total cost. When you buy, you add shares and cost. When you sell, you remove a proportion of the cost: cost of shares sold = cost of pool × shares sold ÷ shares in pool. You do not pick specific cost figures. For companies the pool is also indexed, because indexation allowance applies up to December 2017 only. Any indexation factors you need are given in the question, and shares bought after December 2017 get none.

A bonus issue gives free shares in proportion to the existing holding. It adds shares to the pool at nil cost, so total cost does not change. A rights issue lets shareholders buy new shares, usually at a discount. It adds shares and the amount paid to the pool. Treat a rights issue like a purchase made on the date of the issue. Neither issue is a disposal.

The substantial shareholding exemption (SSE) can make a gain on shares exempt, and a loss is then not allowable. Check it before you compute anything. The investing company must have held at least 10% of the ordinary share capital, with matching rights to profits and assets on a winding up, for a continuous 12 months in the six years before the disposal. The investee company must be a trading company, or the holding company of a trading group or sub-group, throughout the 12-month period and at the time of disposal. The investing company itself does not need to be a trading company.

Key rules to remember

Matching order for companies: Same day → previous 9 days (earliest first) → share pool; Use this order for every disposal of shares in the same class of the same company.
Gain on shares: Gain = Proceeds − Allowable cost (− indexation allowance, where it applies); Indexation allowance is available only up to December 2017, and the factors are given in the question. A gain cannot be turned into a loss by indexation.
Cost from the share pool: Cost = Total pool cost × Shares sold ÷ Shares in pool; Do this on the pool balance immediately before the sale. Carry forward the remaining shares and cost.
Bonus issue: Add new shares to the pool at nil cost; Total cost is unchanged. Cost per share falls.
Rights issue: Add new shares and the amount paid to the pool; Not a disposal. Do not treat it as a bonus issue.
Substantial shareholding exemption: Holding ≥ 10% of ordinary share capital for 12 months in the previous 6 years, plus the investee is a trading company or trading group holding company; If it applies, the gain is exempt and a loss is not allowable.

How to solve Chargeable Gains: Shares and Securities questions

Use this method for any question on a company's share disposal. It keeps the matching order and the pool in the right sequence.

1Check SSE first. Look for a holding of at least 10% held for 12 months, and a trading investee company. If it applies, say the gain is exempt and stop.
2List all acquisitions and the disposal in date order. Note the class of share and the company.
3Match the disposal with same-day acquisitions. Compute proceeds, cost and gain for that part.
4Match any remaining shares with acquisitions in the previous nine days, earliest first. Compute that gain.
5Build the share pool from all other acquisitions. Add bonus issues at nil cost and rights issues at the amount paid. Add indexation only if the question gives the factors.
6Match the remaining shares with the pool. Cost = pool cost × shares sold ÷ pool shares. Then compute the gain.
7Apportion proceeds by number of shares for each match. Add the gains. Carry forward the pool balance.
8State that the net gain goes into chargeable profits for corporation tax. Companies have no annual exempt amount.

Quickest way: Pool table and apportioned proceeds

When to use it: Use it in Section C questions with several purchases, a bonus or rights issue and one disposal.

Draw a three-column table: Number, Cost, and an indexed cost column only if the question needs one.
Write each acquisition on a new row with a running total.
Put bonus shares in with nil cost. Put rights shares in with the amount paid.
Check the pool is untouched by same-day and nine-day matches before you use it.
Compute proceeds per share. Multiply by the shares in each match.
After the disposal, write the remaining shares and cost on the last row. Marks are often given for this carry-forward.

Common mistakes in Chargeable Gains: Shares and Securities

Using the individual's 30-day rule or the 10-day wording for a company.
Students mix up the rules for individuals and companies.
Fix: For a company, match the same day, then the previous nine days, then the pool.
Treating a rights issue as a bonus issue and adding no cost.
Both words involve new shares.
Fix: A bonus issue is free. A rights issue is paid for, so add the amount paid to pool cost.
Treating a bonus or rights issue as a disposal.
New shares are issued, so students think something has been sold.
Fix: Neither issue is a disposal. Only adjust the pool.
Using the whole pool cost for a part sale.
Students forget to take only a proportion.
Fix: Cost = pool cost × shares sold ÷ pool shares. Keep the remainder.
Computing a gain when SSE applies, or claiming a loss on an SSE disposal.
Students go straight to the computation.
Fix: Test the 10%, 12-month and trading-company conditions first. If SSE applies, a loss is not allowable.
Applying the individual's annual exempt amount or CGT rates to a company.
Students see 'chargeable gain' and reach for the CGT rates table.
Fix: A company's gains are added to its profits and charged to corporation tax. There is no annual exempt amount.

Worked examples

Example 1

Alpha Ltd bought 5,000 shares in Beta plc on 1 January 2019 for £20,000. On 1 March 2020 Beta plc made a 1 for 5 bonus issue. On 1 September 2021 Beta plc made a 1 for 4 rights issue and Alpha Ltd took up its rights at £5 per share. On 10 February 2025 Alpha Ltd sold 3,000 shares for £18,000. Compute the chargeable gain. Ignore SSE. Indexation is not due on these acquisitions because they were after December 2017.

Show the solution

No same-day or previous nine-day acquisitions, so the disposal is matched with the pool.
Purchase: 5,000 shares, cost £20,000.
Bonus 1 for 5: 1,000 new shares at nil cost. Pool becomes 6,000 shares, £20,000.
Rights 1 for 4: 6,000 ÷ 4 = 1,500 shares at £5 = £7,500. Pool becomes 7,500 shares, £27,500.
Cost of 3,000 shares = £27,500 × 3,000 ÷ 7,500 = £11,000.
Gain = £18,000 − £11,000 = £7,000.
Pool carried forward: 4,500 shares, cost £16,500.

Answer: The chargeable gain is £7,000, which is added to Alpha Ltd's profits for corporation tax. The pool carries forward 4,500 shares with cost £16,500.

Example 2

Gamma Ltd's pool of shares in Delta plc contains 8,000 shares with cost £24,000, all acquired after December 2017. On 15 June 2026 it bought 3,000 more shares for £12,000. On 20 June 2026 it bought 1,000 shares for £4,500 and sold 10,000 shares for £50,000. Compute the gain. Ignore SSE.

Show the solution

Proceeds per share = £50,000 ÷ 10,000 = £5.
Same day (20 June): 1,000 shares. Proceeds £5,000, cost £4,500, gain £500.
Previous nine days (15 June is within nine days): 3,000 shares. Proceeds £15,000, cost £12,000, gain £3,000.
Remaining shares sold: 10,000 − 1,000 − 3,000 = 6,000, matched with the pool.
Pool cost = £24,000 × 6,000 ÷ 8,000 = £18,000. Proceeds = 6,000 × £5 = £30,000. Gain £12,000.
Total gain = £500 + £3,000 + £12,000 = £15,500.
Pool carried forward: 2,000 shares, cost £6,000.

Answer: The total chargeable gain is £15,500, made up of £500 (same day), £3,000 (previous nine days) and £12,000 (pool). The pool carries forward 2,000 shares with cost £6,000.

Exam tips

Do the matching in the correct order and label each match. Markers give separate marks for each one.
Show the pool as a table with a running total of shares and cost. It makes the carry-forward easy to mark.
Read whether the new shares are a bonus issue or a rights issue. Check the amount paid per share.
Check the SSE conditions whenever the question mentions a holding of 10% or more, or a long holding period.
Objective test questions may ask for the pool cost per share or whether SSE applies. Do the quick pool arithmetic first, then choose your answer.

Practice questions from Chargeable gains for companies

Chargeable Gains: Shares and Securities in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

ACCA Strategic ProfessionalComputing Company Chargeable Gains and Indexation

Chargeable Gains: Shares and Securities: frequently asked questions

What are the share matching rules for companies in ACCA TX-UK?

A company matches a disposal with shares bought on the same day first. Then it uses shares bought in the previous nine days, earliest first. Any remaining shares come from the share pool.

How do bonus and rights issues affect the share pool?

A bonus issue adds shares at nil cost, so total pool cost does not change. A rights issue adds shares and the amount paid to the pool. Neither is a disposal.

What are the conditions for the substantial shareholding exemption?

The investing company must have held at least 10% of the ordinary share capital, with matching rights to profits and assets on a winding up, for a continuous 12 months in the six years before the disposal. The investee company must be a trading company, or the holding company of a trading group or sub-group, throughout that period and at the time of disposal. The investing company need not be a trading company.

Do companies get an annual exempt amount on share gains?

No. A company's chargeable gains are included in its profits and charged to corporation tax. The annual exempt amount and the individual CGT rates do not apply.