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HMRC internal manual

Capital Gains Manual

Share identification rules for corporation tax: outline of rules from 1985

For companies and other concerns within the charge to Corporation Tax, disposals of shares of the same class in the same company held in the same capacity must be identified in the following order.

  • Against acquisitions on the same day, TCGA92/S105(1)(b),see CG51610.
  • If the disposal occurred before 5 December 2005, against acquisitions in the prescribed period which is either one month or six months, TCGA92/S106, see CG51060 onwards. Note that TCGA92/S106 was repealed by FA06/S72 with effect for all disposals on or after 5 December 2005, see CG51611.
  • Against acquisitions in the previous nine days, Section TCGA92/S107(3), see CG51615-51616.
  • Against shares in the `Section 104 holding’, TCGA92/S107(7) and (8), see CG51620 onwards.
  • Against shares in the `1982 holding’, TCGA92/S107(7) and (9), see CG51630 onwards.
  • Against shares held on 6 April 1965 on a last in first out (LIFO) basis, TCGA92/S107(7) and (9), see CG51640 onwards.
  • Finally against subsequent acquisitions of shares, taking the earliest acquisition first, TCGA92/S105(2), see CG51610.

From 1 April 2002 gains made by companies on share disposals may, if the necessary conditions are satisfied, be exempt under TCGA92/SCH7AC (CG53000+). In such cases the shares disposed of are identified in the same way as for disposals giving rise to chargeable gains, so that for any future disposals which may not fall within the Schedule 7AC exemption the shares disposed of can be correctly calculated.

Some securities do need to be identified on an individual basis, for example, securities within the accrued income scheme. These securities are called `relevant securities’ and their treatment is described at CG51650+.