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Advanced Taxation (UK) · Capital gains tax: gains and losses on the disposal of shares and securities

Share Disposals by Individuals: Matching Rules and Section 104 Pooling

Updated 11 October 2026 · Fact-checked

When an individual sells shares, you match the disposal against acquisitions in a fixed order: same day first, then purchases in the following 30 days (earliest first), then the Section 104 pool of all earlier purchases. Each matched slice gets its own proceeds, cost and gain. Add the gains, then deduct losses and the annual exempt amount.

Understand Share Disposals by Individuals: Matching Rules and Pooling

An individual often buys the same company's shares many times at different prices. When some are sold, you cannot say which ones. The law solves this with fixed share matching rules, so you must follow them in order and not pick the cheapest or dearest cost.

For individuals the order is: (1) shares acquired on the same day as the disposal; (2) shares acquired in the 30 days after the disposal, taking the earliest first; (3) the Section 104 pool. The 30-day rule stops a person selling shares to create a loss and buying them straight back.

The Section 104 pool holds all shares of the same class in the same company acquired before the disposal date and not already matched. You track two figures: the number of shares and the total allowable cost. Each purchase adds to both. Each sale takes out a proportion of the cost, based on the shares sold as a fraction of the shares in the pool. Individuals get no indexation, so the pool is simply a running cost.

Shares matched under the same-day or 30-day rules are matched at their own actual cost. They never go into the pool. Purchases made after a disposal, beyond 30 days, are not matched with that disposal. They start or add to the pool for later sales.

Allowable cost includes the price paid plus incidental costs such as broker fees and stamp duty on shares (0.5% in the tax tables). The gain is then taxed after the annual exempt amount (£3,000) at 18% or 24%, depending on how much of the basic rate band is left after taxable income. The rates and amount are in the tax tables given in the exam.

Key rules to remember

Matching order for individuals
1. Same day 2. Next 30 days (earliest first) 3. Section 104 pool
Apply this order to every disposal. Match any part of a sale not covered by one rule to the next rule.
Section 104 pool cost on a sale
Cost of shares sold = Pool cost × Shares sold ÷ Shares in pool before the sale
Use the pool balance immediately before the sale. Deduct both the shares and the cost afterwards.
Gain on each matched slice
Gain = Proceeds for those shares − Allowable cost (including incidental costs)
If a sale is split across rules, apportion the proceeds by number of shares.
30-day window
Acquisitions on the day after the disposal up to 30 days after it
Same-day shares are matched first. Count the days carefully from the disposal date.
CGT payable
Taxable gain = Total gains − current-year losses − annual exempt amount (£3,000); then × 18% or 24%
Take the rates and the annual exempt amount from the tax tables. The rate depends on the unused basic rate band.

How to solve Share Disposals by Individuals: Matching Rules and Pooling questions

Use the same layout for every share question. A clear layout earns method marks even if you slip on arithmetic.

  1. 1List every acquisition and disposal in date order with number of shares and total cost, including incidental costs.
  2. 2For each disposal, identify the date and test the same-day rule first. Match any shares bought on that day.
  3. 3Test the next 30 days. Match later purchases in date order until the shares sold are used up.
  4. 4Allocate the rest of the disposal to the Section 104 pool. Build the pool using only acquisitions before the disposal date that were not already matched.
  5. 5Compute proceeds, cost and gain for each slice. Apportion proceeds by number of shares when the sale is split.
  6. 6Update the pool balance (shares and cost) after each disposal and carry it forward.
  7. 7Add the gains for the tax year, deduct allowable losses and the annual exempt amount, then apply the correct CGT rate from the tax tables.
  8. 8State your assumptions, for example the rate of tax or the date of purchase, in a short note.

Quickest way: Three-column matching grid

When to use it: Use this when a question has several purchases and one or more sales and time is short.

  1. Draw three columns: Same day, 30 days, Pool. Under each, write the shares matched.
  2. Fill same day and 30 days first. They are usually small and easy to spot from dates.
  3. Calculate the pool in one table: date, shares, cost, with a running total.
  4. Compute pool cost sold as Pool cost × Shares sold ÷ Pool shares, and leave the balance carried forward.
  5. Total the three gains and move straight to the annual exempt amount and the tax.

Common mistakes in Share Disposals by Individuals: Matching Rules and Pooling

  • Putting shares bought on the same day or within 30 days into the Section 104 pool.

    Students treat every purchase as part of the pool because that is the usual rule.

    Fix: Check the dates first. Shares matched under same-day or 30-day rules use their own cost and stay out of the pool.

  • Including purchases made after the sale (beyond 30 days) in the pool for that sale.

    Students add all purchases listed in the question to one pool.

    Fix: The pool for a disposal only contains shares acquired before the disposal date. Later purchases go into the pool for later sales.

  • Using average cost per share of all purchases without tracking the pool after a sale.

    Students forget that part of the cost leaves the pool when shares are sold.

    Fix: After each sale deduct both the shares and the proportionate cost, then carry the balance forward.

  • Applying the 30-day rule to purchases before the sale.

    Students think 30 days works in both directions.

    Fix: The rule looks only forward. Purchases before the sale go to the pool unless they were on the same day.

  • Ignoring incidental costs such as stamp duty and broker fees, or not deducting them from proceeds.

    Students focus on the share price only.

    Fix: Add purchase costs to the cost figure and deduct selling costs from the proceeds.

  • Applying indexation or a 1982 rebasing to an individual's shares.

    Students mix up company and individual rules.

    Fix: Individuals get no indexation allowance in the pool. Do not add any uplift unless the question clearly requires it.

Worked examples

Example 1

Anil, a higher rate taxpayer, bought 4,000 shares in Zed plc on 10 June 2017 for £10,000 and 2,000 shares on 5 March 2020 for £7,000. On 20 September 2025 he sold 3,000 shares for £15,000. He made no other purchases or sales. Compute his CGT liability for 2025/26, assuming no other gains or losses.

Show the solution
  1. Same day: no purchases on 20 September 2025. 30 days: no purchases up to 20 October 2025. All 3,000 shares come from the Section 104 pool.
  2. Pool: 4,000 shares cost £10,000; add 2,000 shares cost £7,000; total 6,000 shares, cost £17,000.
  3. Cost of shares sold = £17,000 × 3,000 ÷ 6,000 = £8,500.
  4. Gain = £15,000 − £8,500 = £6,500.
  5. Deduct the annual exempt amount of £3,000: taxable gain £3,500.
  6. CGT at 24% (higher rate taxpayer) = £3,500 × 24% = £840.
  7. Pool carried forward: 3,000 shares, cost £8,500.

Answer: Gain £6,500; taxable gain £3,500; CGT £840. Pool carried forward is 3,000 shares with cost £8,500.

Example 2

Bella held a Section 104 pool of 3,000 shares in Kay plc with total cost £9,000. On 15 December 2025 she bought 500 shares for £3,000. On 15 December 2025 she also sold 4,000 shares for £28,000. On 2 January 2026 she bought 700 shares for £4,200. Compute her total gain for 2025/26 and the CGT if she is a higher rate taxpayer with no other gains.

Show the solution
  1. Disposal is 4,000 shares for £28,000, which is £7 per share.
  2. Same day: 500 shares bought on 15 December 2025 for £3,000. Proceeds 500 × £7 = £3,500. Gain £500.
  3. 30 days: purchase on 2 January 2026 is within 30 days of 15 December 2025. Match 700 shares cost £4,200. Proceeds 700 × £7 = £4,900. Gain £700.
  4. Pool: shares left to match = 4,000 − 500 − 700 = 2,800. Proceeds 2,800 × £7 = £19,600.
  5. Pool cost = £9,000 × 2,800 ÷ 3,000 = £8,400. Gain = £19,600 − £8,400 = £11,200.
  6. Total gains = £500 + £700 + £11,200 = £12,400.
  7. Less annual exempt amount £3,000 = taxable gain £9,400.
  8. CGT at 24% = £9,400 × 24% = £2,256.
  9. Pool carried forward: 200 shares, cost £9,000 − £8,400 = £600.

Answer: Total gain £12,400; taxable gain £9,400; CGT £2,256. The pool carried forward is 200 shares with cost £600.

Exam tips

  • Write out the dates of every purchase and sale first. Most marks are lost because a same-day or 30-day purchase was missed.
  • Show the pool as a table with shares and cost columns. Markers can give follow-through marks if you slip.
  • State the matching rule next to each slice, for example same day or 30 days. This earns marks for method.
  • In a Section A scenario, link the gain to the client's rate of tax and any losses. Use the tax tables for the rates and the annual exempt amount.
  • If a client plans a sale, mention the 30-day rule and warn about buying back shares too soon, as a professional skills point.

Practice questions from Capital gains tax: gains and losses on the disposal of shares and securities

Share Disposals by Individuals: Matching Rules 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.

Share Disposals by Individuals: Matching Rules and Pooling: frequently asked questions

What is the order of share matching rules for individuals?

Match first with shares acquired on the same day, then with shares acquired in the 30 days after the sale, earliest first. Any remaining shares sold come from the Section 104 pool.

What goes into the Section 104 pool?

All shares of the same class in the same company bought before the disposal date and not already matched under the same-day or 30-day rules. You track the number of shares and the total cost.

Do individuals get indexation on the Section 104 pool?

No. For individuals the pool is a running total of shares and cost without any indexation uplift.

What happens if I buy shares more than 30 days after a sale?

They are not matched with that sale. They go into the pool and are available for matching with later disposals.