Advanced Taxation (UK) · Capital gains tax: gains and losses on the disposal of movable and immovable property

Disposal of Shares, Share Reorganisations and Matching Rules

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: same day, then the next 30 days, then the section 104 pool. Bonus and rights issues adjust the pool. Takeovers use share-for-share rules or cash, or both.

Understand Disposal of Shares, Share Reorganisations and Matching Rules

Shares of the same class in the same company are identical. So when you sell some, you cannot say which ones you sold. The law fixes the answer with matching rules. You must follow them in order.

For an individual, a disposal is matched first with shares acquired on the same day. Next it is matched with shares acquired in the following 30 days (earliest first). Anything left is matched with the section 104 pool, which holds all other shares acquired before the disposal. The 30-day rule stops bed and breakfasting, where you sell shares to use a loss or the annual exempt amount and buy them back at once.

The section 104 pool keeps two running figures: the number of shares and the total cost. Purchases add to both. A part disposal removes shares and a proportion of cost, based on the number of shares sold over the number held. Cost is never taken at the price of the latest purchase.

A bonus issue gives free shares. It adds shares to the pool but no cost. A rights issue is a purchase at the issue price, so it adds shares and the cash paid. In both cases the new shares are treated as acquired when the original holding was. Because of this, a rights issue is added to the pool and does not need separate matching.

In a takeover, a shareholder who receives only new shares in the bidder has no gain at that point. The new shares take over the cost and acquisition date of the old ones. If the shareholder receives shares and cash, the cash is a part disposal, and you apportion the cost by market values. The anti-avoidance rules can apply, so state the clearance assumption the question gives you. Rates are 18% and 24%, and the annual exempt amount is £3,000.

Key rules to remember

Order of matching for individuals: 1) Same day 2) Next 30 days (earliest first) 3) Section 104 pool; The 30-day match applies to shares bought after the sale. Gain or loss on a matched acquisition uses that acquisition's actual cost.
Section 104 pool cost on part disposal: Cost allowed = Total pool cost × (Shares sold ÷ Shares in pool); Use the pool after any bonus and rights issue and after earlier acquisitions. Carry forward the remaining shares and cost.
Bonus issue: New shares added to pool; cost added = ₹0 (£0); Total cost is unchanged. Cost per share falls.
Rights issue: Pool shares + new shares; pool cost + (new shares × issue price); Treat as a purchase added to the pool at the date of the original holding.
Part cash, part shares takeover: Cost allowed = Total cost × A ÷ (A + B); A = cash received, B = market value of new shares at the date of the takeover. The gain is proceeds A less this cost.
CGT rates and annual exempt amount (2025/26): 18% lower rate, 24% higher rate, annual exempt amount £3,000; Use the tax tables given in the exam. The rate depends on how much of the basic rate band is left after taxable income.

How to solve Disposal of Shares, Share Reorganisations and Matching Rules questions

Use the same routine on every share question. Work in a grid so you do not miss a match.

1List all share transactions in date order, with number of shares, cost and proceeds for each.
2Check for any bonus issue, rights issue or takeover. Adjust the holding first. A bonus or rights issue gives shares that are treated as acquired when the original holding was.
3Match the disposal with same-day acquisitions. Compute proceeds less cost for those shares.
4Match the remaining shares with acquisitions in the next 30 days, earliest first. Use the actual cost of those shares.
5Match what is left with the section 104 pool. Build the pool with shares and cost columns, then apply the fraction of shares sold to cost.
6Total the gains and losses for the disposal. Deduct losses and the annual exempt amount in the correct order, as the question requires.
7Apply the rate (18% or 24%) according to the taxable income and basic rate band available, and state the answer clearly.

Quickest way: Three-column matching grid

When to use it: Use it when a question has several purchases and one or more sales, or a sale followed by a quick repurchase.

Draw columns: Same day, 30 days, Pool. Put the shares sold across them first.
Fill the same-day and 30-day columns before you touch the pool. Look at every purchase after the sale date.
Build the pool in one table: date, shares, cost. Add bonus shares with nil cost and rights shares at the amount paid.
Cross-check that shares matched across all three columns equal shares sold.
Gain per column = proceeds (pro rata) less cost. Add the three gains.

Common mistakes in Disposal of Shares, Share Reorganisations and Matching Rules

Putting all acquisitions into the pool and ignoring the 30-day rule
Students match with the pool by habit and forget to read purchase dates after the sale.
Fix: Always check for purchases within 30 days after the sale before building the pool. Those shares come out of the pool and are matched first.
Adding bonus shares at a cost
Students treat free shares as bought at market value.
Fix: Add the shares to the number column and add £0 to the cost column.
Taking pool cost at the latest price per share
Students use the price of the last purchase rather than the pool average.
Fix: Cost allowed = total pool cost × shares sold ÷ shares in pool. Carry forward the balance of shares and cost.
Treating a rights issue as a separate acquisition at a later date
The shares were bought later, so students match them as new purchases.
Fix: A rights issue is added to the pool at the issue price. Pool shares and pool cost both increase.
Charging gain on a pure share-for-share takeover
Students see an exchange and assume a disposal at market value.
Fix: If the shareholder receives only shares, there is no disposal at that time. The new shares take the old cost and date. Only cash received triggers a part disposal.
Apportioning cost on a part cash takeover using number of shares
Students are used to share fractions from the pool.
Fix: Use values: cash received ÷ (cash received + market value of shares received) times total cost.

Worked examples

Example 1

Anita bought 4,000 shares in Hex plc for £8,000 in May 2015 and 2,000 shares for £7,000 in June 2019. In July 2020 Hex plc made a 1 for 2 bonus issue. In October 2025 she sold 5,000 shares for £30,000. Compute the chargeable gain. Ignore the annual exempt amount.

Show the solution

Pool before bonus: 6,000 shares, cost £15,000 (£8,000 + £7,000).
Bonus issue 1 for 2: 3,000 new shares at £0. Pool is now 9,000 shares, cost £15,000.
No same-day or 30-day acquisitions, so all 5,000 shares come from the pool.
Cost allowed = £15,000 × 5,000 ÷ 9,000 = £8,333.
Gain = £30,000 − £8,333 = £21,667.
Pool carried forward: 4,000 shares, cost £6,667.

Answer: The chargeable gain is £21,667 before the annual exempt amount.

Example 2

Ben holds 3,000 shares in Ivy plc in a section 104 pool with cost £9,000. On 10 January 2026 he sells 2,000 shares for £10,000. On 20 January 2026 he buys 500 shares for £2,000. Compute the gains on the sale.

Show the solution

Check for same-day purchases: none.
Next 30 days: the purchase on 20 January 2026 is within 30 days. Match 500 shares.
Proceeds for the 500 shares = £10,000 × 500 ÷ 2,000 = £2,500. Cost = £2,000. Gain = £500.
Remaining 1,500 shares are matched with the pool.
Proceeds = £10,000 × 1,500 ÷ 2,000 = £7,500.
Pool cost = £9,000 × 1,500 ÷ 3,000 = £4,500. Gain = £7,500 − £4,500 = £3,000.
Total gain = £500 + £3,000 = £3,500.
Pool carried forward: 1,500 shares, cost £4,500.

Answer: The total chargeable gain is £3,500, made up of £500 on the 30-day match and £3,000 on the pool.

Exam tips

Write out the matching order at the top of your answer and mark the sale date. It scores method marks even if arithmetic slips.
Always read purchase dates after a sale. A repurchase within 30 days is the usual trap in ATX questions.
Show the pool as a table with shares and cost columns and carry forward the balance. It earns marks and helps if a second disposal follows.
In takeover questions, say clearly whether there is a disposal. Give a short reason, then compute only the part that is a disposal.
Finish by applying the annual exempt amount of £3,000 and the 18% or 24% rate from the tax tables, and state any tax payable.

Practice questions from Capital gains tax: gains and losses on the disposal of movable and immovable property

Disposal of Shares, Share Reorganisations and Matching Rules in other exams

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

ACCA Applied SkillsShares and Securities Matching and Pooling

Disposal of Shares, Share Reorganisations and Matching Rules: frequently asked questions

What are the share matching rules for individuals in ATX?

A disposal is matched first with acquisitions on the same day. Then it is matched with acquisitions in the following 30 days, earliest first. Any remaining shares are matched with the section 104 pool.

How do I calculate a section 104 pool after a rights issue?

Add the new shares to the number of shares in the pool. Add the amount paid for them to the pool cost. A later part disposal then takes cost in proportion to the shares sold over the shares in the pool.

Is there a CGT charge when shares are exchanged in a takeover?

If you receive only new shares in the bidder, there is no disposal at that time. The new shares take over the cost and acquisition date of the old shares. If you also receive cash, the cash is a part disposal, with cost apportioned by values.

What is bed and breakfasting and does it still work?

It means selling shares and buying the same shares back soon after, to create a gain or loss for tax. The 30-day matching rule stops this for individuals. The sale is matched with the repurchase, not with the original cost.