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HMRC internal manual

Capital Gains Manual

Share identification rules for capital gains tax from 6.4.2008: identifying disposals


For individuals and others within the charge to Capital Gains Tax on disposals of shares on or after 6 April 2008 the previous identification rules were simplified with the reintroduction of the Section 104 holding for new acquisitions and its widening to include all shares acquired before 31 March 1982 and after 5 April 1998. Section 106A provides that, for matching acquisitions and disposals of shares of the same class in the same company held in the same capacity

  • the identification rules set out below apply, even if the particular shares were identified in some other way when they were disposed of, or when they were transferred or delivered to the acquirer
  • disposals must be identified in the following order:
  1. Against acquisitions on the same day, TCGA92/S105(1)(b), see CG50822. This is known as the “same day rule”.
  2. Against acquisitions within the 30 days following the disposal, provided the person making the disposal was resident in the United Kingdom at the time of the acquisition, TCGA92/S106A(5) and (5A), see CG51560. This is known as the “bed and breakfast” rule.
  3. Against shares in a Section 104 holding, but without identifying any particular shares in that holding, TCGA92/S104.
  4. Finally against acquisitions following the disposal (and not already identified under stage 2 above), taking the earliest acquisition first, TCGA92/S105(2).

Note that in relation to disposals after 5 April 2008 TCGA92/S105(3) and TCGA92/S106A(5ZA) make it clear that shares identified in accordance with points 1 & 2 above do not enter the S104 holding.