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HMRC internal manual

Capital Gains Manual

Share identification rules for corporation tax: the 10 day rule: general

TCGA92/S107 (3)

The Section 104 holding rules, see CG51620+, do not apply in the following circumstances.

  • A company acquires shares which would otherwise create or be added to a Section 104 holding.
  • Within ten days it makes a disposal of shares of the same class in the same company.

In that case the disposal is identified against the acquisition within the previous nine days, TCGA92/S107 (3 on a first in/first out basis if they are made at different times in the ten day period, TCGA92/S107 (4)(b).

No indexation allowance is due on acquisitions and disposals identified under the ten day rule if the acquisition and disposal are in different months, TCGA92/S107 (6).

If there is a surplus of shares acquired after the matching process these either create or are added to a Section 104 holding. This is treated as an operative event in the month the shares were acquired not the month of disposal if the ten days straddle two months.

The ten day rule does not apply to shares acquired as a result of a share reorganisation such as a rights issue. This is because the share reorganisation is not treated as involving any acquisition of the new shares.