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

Section 104 Share Pool Calculation for ACCA TX-UK

Updated 11 October 2026 · Fact-checked

A section 104 pool holds all shares of one class in one company that an individual bought before the disposal. You track the number of shares and their total cost. On a sale, the cost allowed is the pooled cost × shares sold ÷ shares in the pool. The gain is proceeds less that cost.

Understand Section 104 Share Pool Calculations

When you buy shares of the same class in the same company at different times and prices, you cannot tell which shares you later sell. The rules solve this by merging them into one pool. The pool has two figures: the number of shares and the total cost. You never track a price per share separately.

For an individual, a disposal is matched in a set order. First come shares bought on the same day. Next come shares bought in the following 30 days. Only what is left is matched with the section 104 pool, which holds earlier purchases. So the pool is the last stop, but it is the one you use most often.

Every purchase adds shares and cost to the pool. Every sale removes shares and a proportion of the cost. The cost removed is not the latest price. It is the average cost of the pool, applied to the shares sold. What remains is carried forward as the new pool.

Bonus issues and rights issues change the pool. A bonus issue gives free shares, so the number goes up and the cost does not change. A rights issue is a purchase at the issue price, so you add the new shares and the cash paid. If a rights issue happens before the sale, treat it as an ordinary addition to the pool.

The annual exempt amount of £3,000 and the 18% and 24% rates are given in the exam. The pool only decides the allowable cost. Once you have the gain, the usual CGT computation takes over.

Key rules to remember

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.

How to solve Section 104 Share Pool Calculations questions

Use this layout for any individual share disposal question. Draw the pool as a three-column table: number, cost, and a note on what happened.

  1. 1List all purchases, bonus issues, rights issues and sales in date order. Note the date of the disposal.
  2. 2Apply the matching rules to the disposal. Check for a purchase on the same day or in the following 30 days first. Match those shares at their own cost.
  3. 3Build the pool from the remaining earlier purchases. Add number and cost for each purchase, including rights issue shares taken up.
  4. 4For a bonus issue, add the new shares to the number column only. Leave the cost unchanged.
  5. 5Work out the shares sold from the pool. Calculate cost = pool cost × shares sold ÷ pool shares, and take it out of the pool.
  6. 6Compute the gain for each matched block: proceeds (net of selling costs) less allowable cost. Add the blocks for the total gain.
  7. 7Show the pool carried forward in case of a later sale. Then apply losses, the £3,000 annual exempt amount and the rate.

Quickest way: Three-column pool with proportion fraction

When to use it: Use this for any pool question when you have limited time. It works for both written and objective test questions.

  1. Write the pool columns first: shares, cost. Do not write price per share.
  2. Add each purchase on a new line and total the columns just before the sale.
  3. Write the sold fraction (sold ÷ held) and multiply the total cost by it.
  4. Subtract the cost used from the pool. Check that cost left equals total cost minus cost used.
  5. In an objective test, compute only what the question asks: the gain, the cost or the shares left. Skip the rest.

Common mistakes in Section 104 Share Pool Calculations

  • Using the price of the most recent purchase as the cost of shares sold.

    Students think of a sale as first-in or last-out, as in inventory.

    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.

    The pool feels like the main rule, so students jump to it.

    Fix: Always check dates first. Any purchase on the day of sale or in the next 30 days is matched before the pool.

  • Adding cost for a bonus issue.

    Students treat the new shares as a purchase.

    Fix: A bonus issue adds shares only. The total cost stays the same.

  • Leaving out the cash paid on a rights issue, or leaving out the new shares.

    Students treat the rights issue as a bonus issue or ignore it.

    Fix: Add both the shares taken up and the cash paid to the pool, as an ordinary purchase.

  • Deducting the cost of the shares sold but not reducing the cost of the pool, or the reverse.

    Students rush the carried-forward line.

    Fix: After each sale, reduce both columns. Cost left = cost before − cost used.

  • Ignoring selling costs, or deducting them from the pool.

    Students confuse buying and selling costs.

    Fix: Add buying costs to the pool cost. Deduct selling costs from the proceeds of that disposal.

Worked examples

Example 1

Priya bought 2,000 shares in Zed plc for £6,000 in May 2015 and 3,000 more for £12,000 in June 2018. In August 2026 she sold 4,000 shares for £22,000. She has no other gains and has not used her annual exempt amount. Calculate the chargeable gain.

Show the solution
  1. No purchases on the day of sale or in the next 30 days, so all shares are matched with the pool.
  2. Pool: 2,000 shares, cost £6,000. Add 3,000 shares, cost £12,000. Pool is 5,000 shares, cost £18,000.
  3. Cost of shares sold = £18,000 × 4,000 ÷ 5,000 = £14,400.
  4. Gain = £22,000 − £14,400 = £7,600.
  5. Pool carried forward: 1,000 shares, cost £18,000 − £14,400 = £3,600.
  6. Taxable gain after the annual exempt amount of £3,000 = £4,600.

Answer: The gain is £7,600. After the £3,000 annual exempt amount, £4,600 is taxable. The pool c/f is 1,000 shares with cost £3,600.

Example 2

Omar bought 1,000 shares in Kay plc for £5,000 in 2014. In 2017 there was a 1 for 4 bonus issue. In 2020 he took up a rights issue of 1 for 5 at £6 per share. In March 2027 he sold 1,200 shares for £15,600. Calculate the gain.

Show the solution
  1. Start: 1,000 shares, cost £5,000.
  2. Bonus issue 1 for 4: 1,000 ÷ 4 = 250 new shares. Pool is 1,250 shares, cost still £5,000.
  3. Rights issue 1 for 5: 1,250 ÷ 5 = 250 shares at £6 = £1,500. Pool is 1,500 shares, cost £6,500.
  4. Sale of 1,200 shares: cost = £6,500 × 1,200 ÷ 1,500 = £5,200.
  5. Gain = £15,600 − £5,200 = £10,400.
  6. Pool carried forward: 300 shares, cost £6,500 − £5,200 = £1,300.

Answer: The chargeable gain is £10,400 before the annual exempt amount. The pool c/f is 300 shares with cost £1,300.

Exam tips

  • 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.
  • Round to the nearest £ as the exam instructions allow, and keep exact figures until the final line.
  • After the gain, remember the annual exempt amount of £3,000 and the rates of 18% and 24%, which are given in the exam.

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

Section 104 Share Pool Calculations in other exams

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

Section 104 Share Pool Calculations: frequently asked questions

What is a section 104 pool in ACCA TX-UK?

It is a single pool of shares of the same class in the same company, bought before the disposal. You track the total number and total cost. On a sale, the allowable cost is a proportion of the pooled cost.

Do bonus issues change the cost in the share pool?

No. A bonus issue adds free shares, so the number of shares rises but the total cost stays the same. A rights issue is different, because you pay cash and add it to the cost.

Which shares are matched first on a disposal by an individual?

Shares bought on the same day come first, then shares bought in the following 30 days. Any remaining shares sold come from the section 104 pool.

How do I calculate the cost of shares sold from the pool?

Multiply the total pool cost by the number of shares sold, then divide by the number of shares in the pool just before the sale. Take that amount out of the pool and carry the balance forward.