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Taxation (UK) · Gains and losses on the disposal of shares and securities

Bonus Issues and Rights Issues in the Share Pool

Updated 11 October 2026 · Fact-checked

A bonus issue gives you free shares, so the number of shares in the pool rises but the cost does not change. A rights issue lets you buy extra shares, so you add both the new shares and the price you pay to the pool. Then you match disposals against the pool as usual.

Understand Bonus Issues and Rights Issues

When you hold shares and the company changes its share capital, the shares you already own are not treated as a new purchase. The new shares join your existing holding. That is why these issues sit inside the share pool for individuals, and you adjust the pool instead of making a separate acquisition.

A bonus issue (also called a scrip or capitalisation issue) gives you extra shares for free. You pay nothing, so no new cost arises. The pool has more shares but the same total cost. The cost per share falls.

A rights issue gives you the right to buy new shares, usually at a price below the market price. You pay cash, so that cash is a real cost. You add the new shares and the amount paid to the pool. Both the number of shares and the total cost go up.

The pool has two columns to track: number of shares and cost. On a later disposal, take the share of the pool cost that matches the shares sold: cost of shares sold = shares sold ÷ shares in pool × pool cost. Remember that disposals are matched first with same-day acquisitions, then acquisitions in the following 30 days, and only then with the pool. A bonus or rights issue before the sale only changes the pool.

Key rules to remember

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.

How to solve Bonus Issues and Rights Issues questions

Use a share pool table with columns for date, number of shares and cost (£). The method works for any question with bonus or rights issues.

  1. 1Check the matching rules first. Look for same-day and 30-day acquisitions before using the pool.
  2. 2Start the pool with the earlier purchases: add the shares and add the cost.
  3. 3Work through each event in date order. A bonus issue adds shares at nil cost.
  4. 4For a rights issue, calculate new shares from the ratio, then multiply by the issue price. Add both amounts to the pool.
  5. 5Total the pool after the last event before the sale.
  6. 6Calculate the cost of the shares sold: shares sold ÷ pool shares × pool cost.
  7. 7Calculate the gain: proceeds less that cost. Deduct losses and the £3,000 annual exempt amount, then apply 18% or 24%.
  8. 8Show the carried-forward balance of shares and cost.

Quickest way: Two-column pool shortcut

When to use it: Use this in Section C or an OT case whenever there are several issues before one sale.

  1. Draw two columns only: shares and £.
  2. Bonus: add shares, write £0 in the cost column.
  3. Rights: add shares and the cash paid. Do the arithmetic as shares × price.
  4. Total both columns once.
  5. Use a fraction for the cost of shares sold: sold over total, times total cost. Cost left = total cost minus that figure, as a check.

Common mistakes in Bonus Issues and Rights Issues

  • Adding a cost for bonus shares

    Students assume every new share needs a value, such as market price.

    Fix: Bonus shares are free. Add the shares and £0. The pool cost stays the same.

  • Treating a rights issue as a separate purchase

    It looks like a new acquisition for cash, so students value it separately.

    Fix: Add the rights shares and the price paid to the pool. They do not form a separate acquisition with their own date.

  • Ignoring the rights issue cash paid

    Students add the shares to the count and forget the cost column.

    Fix: Always calculate shares × issue price and add it to the pool cost.

  • Using the wrong ratio

    Confusion between '1 for 4' and '4 for 1', or applying the ratio to the wrong holding.

    Fix: '1 for 4' means one new share per four held. Apply it to the pool holding at that date.

  • Skipping the same-day and 30-day rules

    Students jump straight to the pool when they see a bonus or rights issue.

    Fix: Check for acquisitions on the sale day and in the next 30 days first. Only the remaining shares come from the pool.

  • Not showing the pool carried forward

    Students stop once they have the gain.

    Fix: Show the remaining shares and cost. It earns marks and prevents errors in later disposals.

Worked examples

Example 1

Anna bought 4,000 shares in Zed plc in January 2015 for £10,000. In March 2018 Zed made a 1 for 4 bonus issue. In June 2020 it made a 1 for 5 rights issue at £3.50 per share, and Anna took up all her rights. In December 2025 she sold 3,000 shares for £15,000. Calculate her taxable gain, assuming she has no other gains and is a higher rate taxpayer.

Show the solution
  1. Initial pool: 4,000 shares, cost £10,000.
  2. Bonus 1 for 4: 4,000 ÷ 4 = 1,000 new shares at £0. Pool is 5,000 shares, cost £10,000.
  3. Rights 1 for 5: 5,000 ÷ 5 = 1,000 shares at £3.50 = £3,500. Pool is 6,000 shares, cost £13,500.
  4. Cost of 3,000 shares sold = 3,000 ÷ 6,000 × £13,500 = £6,750.
  5. Gain = £15,000 − £6,750 = £8,250.
  6. Less annual exempt amount £3,000 = £5,250 taxable.
  7. Tax at 24% = £1,260.
  8. Pool carried forward: 3,000 shares, cost £6,750.

Answer: Chargeable gain £8,250; taxable gain £5,250; CGT £1,260. Carried forward: 3,000 shares, cost £6,750.

Example 2

Ben bought 2,000 shares in Quill plc in March 2012 for £6,000 and 1,000 more in September 2016 for £4,000. Quill made a 1 for 3 rights issue at £5 per share, which Ben took up in full, and later a 1 for 2 bonus issue. In 2026 Ben sold 4,500 shares for £27,000. There were no other purchases or sales near the sale date. Calculate the gain before the annual exempt amount and the remaining pool.

Show the solution
  1. Pool before issues: 3,000 shares, cost £10,000.
  2. Rights 1 for 3: 3,000 ÷ 3 = 1,000 shares at £5 = £5,000. Pool is 4,000 shares, cost £15,000.
  3. Bonus 1 for 2: 4,000 ÷ 2 = 2,000 shares at £0. Pool is 6,000 shares, cost £15,000.
  4. Cost of shares sold = 4,500 ÷ 6,000 × £15,000 = £11,250.
  5. Gain = £27,000 − £11,250 = £15,750.
  6. Remaining pool: 1,500 shares, cost £15,000 − £11,250 = £3,750.

Answer: Gain before annual exempt amount £15,750. Pool carried forward: 1,500 shares, cost £3,750.

Exam tips

  • Set out the pool table even in a short OT question. It stops arithmetic slips and costs very little time.
  • Read the ratio wording carefully. 'One for four' means one new share for every four held.
  • In Section C, state that bonus shares have nil cost and rights shares add the price paid. That earns explanation marks.
  • Check the 30-day rule before using the pool, especially if the question mentions a purchase soon after a sale.
  • Finish with the carried-forward balance. Check that shares sold plus shares left equals the pool total.

Practice questions from Gains and losses on the disposal of shares and securities

Bonus Issues and Rights Issues in other exams

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

Bonus Issues and Rights Issues: frequently asked questions

What is the difference between a bonus issue and a rights issue for CGT?

A bonus issue gives free shares, so it adds shares to the pool but no cost. A rights issue means you pay for new shares, so it adds both shares and the price paid to the pool.

How do I treat a rights issue in the share pool in ACCA TX?

Calculate the new shares from the ratio and multiply by the issue price. Add the shares to the number column and the cash paid to the cost column. Then calculate the cost of any shares sold from the new totals.

Does a bonus issue change the total cost of my shares?

No. The total pool cost stays the same. The cost per share falls because the same cost is now spread over more shares.

Do the rights shares count as acquired on the date of the rights issue?

For an individual's share pool, the new shares join the existing holding. You add them to the pool and do not treat them as a separate acquisition with their own date, unless a question clearly says otherwise.