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HMRC internal manual

Capital Gains Manual

Restrictions: capital losses: time-apportionment: pooled assets

There are four identification rules which apply, in the following order, to establish which individual assets are treated as disposed of on a disposal out of a pool.

  • First, you look at the date which is the relevant pre-entry date, see CG47647, for the cost of acquiring the asset. You identify pooled assets on the assumption that an asset with an earlier pre-entry date is disposed of before an asset with a later pre-entry date, paragraph 3(7)(a) Schedule 7A. If, in relation to any individual asset included in the pool, there is more than one relevant pre-entry date for the cost of acquisition of the asset, you use the earlier or earliest such date. But you disregard the cost of any option on the exercise of which the asset was acquired, paragraph 3(8) Schedule 7A.
  • Next, you treat assets brought into the group at an earlier time as disposed of before assets brought into the group at a later time, paragraphs 1(5) and 3(7)(b) Schedule 7A.
  • If the company has made a disposal before it joined the relevant group, the identification rules apply to determine the assets included in that disposal, by reference to the group of which the company was a member at the time of the disposal, or of which it had most recently been a member, paragraph 3(7)(c) Schedule 7A.
  • Finally, you treat a company as disposing of assets in the order in which it acquired them, paragraph 3(7)(d) Schedule 7A.

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.