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HMRC internal manual

Capital Gains Manual

Restrictions: capital losses: time-apportionment: pooled assets

The loss set-off restrictions will often apply to a pool of shares or other assets which the capital gains code treats as a single asset. The pooling provisions are in TCGA92/S104 (Section 104 holdings of shares or other securities, excluding relevant securities) and TCGA92/S109 (1982 holdings). There are special rules in paragraph 3 Schedule 7A which enable the time-apportionment formula to apply to pooled assets. These rules disaggregate the pool, and identify particular disposals with particular acquisitions.

The time-apportionment formula, as described at CG47620+, then applies to the expenditure on the acquisitions identified with the disposal which gives rise to the loss.

Where indexation applies, in relation to disposals before 30 November 1993, it is calculated on the cost of the particular acquisitions identified with the disposal. The special indexation rules for pooled assets, in TCGA92/S110, are disapplied for this purpose (paragraph 2(9) Schedule 7A), see CG47642+.

Note: Additional rules relating to loss buying were enacted in FA 2006. See CG47020+ for guidance on the rules which apply in priority to TCGA92/SCH7A for accounting periods ending on or after 5 December 2005.

FA11/S46 and FA11/SCH11 greatly simplified the rules in TCGA92/SCH7A for the deduction of losses on or after 19 July 2011. See CG47400+ for guidance on loss streaming from that date.