Taxation (UK) · Gains and losses on the disposal of movable and immovable property

Share Matching Rules and the Section 104 Pool

Updated 11 October 2026 · Fact-checked

When an individual sells shares of the same class in the same company, you match the disposal in a fixed order: first with shares bought on the same day, then with shares bought in the next 30 days, then with the section 104 pool. Gain is proceeds less the matched cost.

Understand Shares and Securities Matching and Pooling

Shares of the same class in the same company are identical. If you bought them at different times and prices, you cannot say which ones you sold. The tax rules solve this by telling you which cost to use. They are called the matching rules.

For an individual, a disposal is matched in this order:

Same day: shares acquired on the day of the disposal.
30-day rule: shares acquired in the 30 days after the disposal. This is the "bed and breakfast" rule. It stops you selling to use a loss or the annual exempt amount and buying back at once.
Section 104 pool: all other shares, held earlier. Their cost is averaged in one pool.

The pool holds two figures: the number of shares and the total cost. Each purchase adds to both. A part disposal removes a proportion of the cost: the cost removed equals the total pool cost multiplied by shares sold ÷ shares in the pool. You do not use the part disposal formula with A ÷ (A + B) here.

A bonus issue gives free shares. It adds shares to the pool at no cost, so the total cost stays the same and the cost per share falls. A rights issue is a purchase of new shares at a stated price in proportion to existing holdings. It adds both shares and the cash paid to the pool. Both issues relate to the original holding, so they are not treated as new acquisitions for the 30-day rule if they arise from holdings in the pool. Just add them to the pool.

The gain is then taxed after the annual exempt amount of £3,000, at the CGT rates given in the exam (18% lower rate and 24% higher rate). Business asset disposal relief, where available, is taxed at 14% on qualifying gains up to the £1,000,000 lifetime limit.

Key rules to remember

Order of matching (individuals): 1. Same day acquisitions → 2. Acquisitions in the next 30 days (earliest first) → 3. Section 104 pool; Apply the order to every disposal. Any shares not matched to the first two go to the pool.
Gain on a matched disposal: Gain = Disposal proceeds − Allowable cost of the matched shares; Do this separately for each matching category. Costs include allowable incidental costs of buying and selling.
Cost of shares sold from the pool: Cost removed = Total pool cost × Shares sold ÷ Shares in pool; Reduce the pool by the shares sold and by the cost removed. Use the pool balance immediately before the sale.
Bonus issue: New pool shares = Old shares × bonus ratio; pool cost unchanged; For a 1 for 4 bonus issue, add one share for every four held. No cost is added.
Rights issue: New pool shares = Old shares × rights ratio; pool cost + cash paid; Add the shares and the price paid. The rights issue price per share is not the pool average.
CGT on net gains: Taxable gain = Net gains − Annual exempt amount (£3,000); Use the rates provided in the exam: 18% and 24%, and 14% for business asset disposal relief or investors' relief gains.

How to solve Shares and Securities Matching and Pooling questions

Use the same layout every time. It keeps the figures traceable and earns method marks in constructed response questions.

1List all purchases, sales, bonus and rights issues in date order, with number of shares and cost or proceeds.
2For each disposal, check for acquisitions on the same day. Match these first and compute that gain.
3Next, check for acquisitions in the following 30 days (not counting the disposal day). Match the earliest first. Compute that gain.
4Build the section 104 pool in columns: number of shares, cost. Add purchases, bonus shares (nil cost) and rights issues (shares and cash) up to the date of sale.
5Match any remaining shares sold to the pool. Remove the cost using the proportion sold and carry forward the balance.
6Compute each gain as proceeds less cost, splitting proceeds by number of shares if only part of the sale matches each rule.
7Add the gains and losses for the tax year, deduct losses and the annual exempt amount, then apply the correct CGT rate.

Quickest way: Matching grid and pool table

When to use it: Use in an objective test question where you need only the gain or the pool cost per share, and when time is short.

Scan the dates first. If there is a purchase within 30 days after the sale, that purchase is matched before the pool.
Write the shares sold as a single number, then cross off shares matched on same day, then 30-day, and leave the rest for the pool.
Build the pool as two running totals: shares and cost. Do not compute cost per share until you need it.
For a bonus issue, change only the share number. For a rights issue, change both.
Check the answer: cost per share in the pool should be reasonable compared with the purchase prices.

Common mistakes in Shares and Securities Matching and Pooling

Using the pool before the 30-day rule
Students match with the pool because it looks easier, or forget that the 30-day rule looks forward in time.
Fix: Always check for purchases in the 30 days after the sale first. Match them, then use the pool only for the balance.
Treating a bonus issue as a purchase with cost
Students confuse it with a rights issue, which requires payment.
Fix: Bonus shares add to the number of shares only. Total pool cost stays the same.
Forgetting to add the rights issue cash to pool cost
Students add the shares but ignore the price paid for them.
Fix: Add both columns. Number of shares increases and cost increases by shares taken up × rights price.
Applying the part disposal formula A ÷ (A + B) to pool sales
Students remember part disposals from land and apply it to shares.
Fix: For pool shares, take the cost of the shares sold as total cost × shares sold ÷ shares in the pool.
Including the day of disposal in the 30 days
Students count the day of sale as day 1.
Fix: Same-day acquisitions are matched first. The 30-day period starts the day after the disposal.
Missing a pool balance after the sale
Students stop after the gain and do not carry forward the remaining shares and cost.
Fix: Show the pool balance after each sale, as later sales depend on it.

Worked examples

Example 1

Mia bought 4,000 shares in Zed plc for £8,000 in May 2018 and a further 2,000 shares for £7,000 in June 2021. On 10 October 2025 she sold 3,000 shares for £12,000. Calculate her gain.

Show the solution

No acquisitions on the same day or within 30 days after 10 October 2025, so all shares come from the pool.
Pool before sale: 6,000 shares, cost £15,000 (£8,000 + £7,000).
Cost of shares sold: £15,000 × 3,000 ÷ 6,000 = £7,500.
Gain: £12,000 − £7,500 = £4,500.
Pool after sale: 3,000 shares, cost £7,500.

Answer: The chargeable gain is £4,500. The pool carried forward is 3,000 shares with cost £7,500.

Example 2

Raj held 5,000 shares in Kay plc in the section 104 pool with a cost of £10,000. On 1 July 2025 the company made a 1 for 5 bonus issue. On 1 August 2025 Raj took up a 1 for 2 rights issue at £3 per share. On 20 September 2025 he sold 4,000 shares for £20,000 and on 5 October 2025 he bought 500 shares for £2,200. Calculate his gain on the sale.

Show the solution

The bonus and rights issues relate to the pool. Bonus: 5,000 ÷ 5 = 1,000 shares at nil cost. Pool becomes 6,000 shares, cost £10,000.
Rights issue: 1 for 2 on 6,000 shares gives 3,000 shares at £3 = £9,000. Pool becomes 9,000 shares, cost £19,000.
The 500 shares bought on 5 October 2025 are within 30 days after the sale (16 days), so they are matched first.
Proceeds attributable: £20,000 × 500 ÷ 4,000 = £2,500. Gain: £2,500 − £2,200 = £300.
The remaining 3,500 shares come from the pool. Proceeds: £20,000 × 3,500 ÷ 4,000 = £17,500.
Pool cost removed: £19,000 × 3,500 ÷ 9,000 = £7,388.89, say £7,389.
Gain on pool shares: £17,500 − £7,389 = £10,111.
Total gain: £300 + £10,111 = £10,411.

Answer: The total chargeable gain is £10,411 (£300 on the 30-day match and £10,111 on the pool shares). The pool carried forward is 5,500 shares with cost of about £11,611.

Exam tips

Write the dates of every transaction in the margin before doing any figures. The 30-day rule is the trap in most questions.
Set out the pool in a small table with columns for number of shares and cost. Marks are often awarded for each correct total.
In a rights issue question, check whether the rights shares are paid for. If they are, add both shares and cost to the pool.
In objective test questions, compute the gain per matching category and add them. Check the answer options match your total before moving on.
Finish by applying the £3,000 annual exempt amount and the correct CGT rate, as the question may ask for the tax payable rather than the gain.

Practice questions from Gains and losses on the disposal of movable and immovable property

Shares and Securities Matching and Pooling 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 ProfessionalShare Pooling and Matching Rules for Companies

Shares and Securities Matching and Pooling: frequently asked questions

What are the share matching rules for individuals?

A disposal is matched first with shares acquired on the same day, then with shares acquired in the following 30 days, and finally with the section 104 pool. Within the 30-day rule, you match the earliest acquisition first.

How do you calculate a section 104 pool?

Keep two columns: number of shares and total cost. Add each purchase to both columns. When shares are sold from the pool, remove cost in proportion to the shares sold compared with the shares in the pool.

How is a rights issue treated for capital gains tax?

A rights issue is treated as an addition to the pool. Add the new shares to the number of shares and add the amount paid to the pool cost. It is not a disposal if you take up the rights.

How does a bonus issue affect the pool?

The number of shares in the pool increases and the total cost stays the same. The cost per share falls, so a later sale will have a lower allowable cost per share.