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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Employment-related securities: employee: restricted securities: clogging: example

If the employee holds both restricted shares, see CG56342, and other shares of the same kind, when the restrictions are removed the two holdings form a single pool for the purposes of calculating any gain or loss on any subsequent disposal or part-disposal. If restrictions are lifted from some but not all of the shares these shares generally leave the restricted pool to join the unrestricted pool at the average cost of the shares in the restricted pool. See CG50750-1.


A an employee of Company B holds the following £1 ordinary shares in Company B

  • shares acquired under an unapproved employee share scheme that cannot be sold for 2 years from the date of acquisition

    • 400 acquired on 1 June 2010 paying the market value of the restricted shares, £4 each
    • 500 acquired on 1 July 2011 paying the market value of the restricted shares, £5 each
  • other unrestricted shares of the same kind

    • 600 acquired on 1 October 2011 in the open market for £6 each.

The shares acquired under the unapproved employee share scheme are subject to restrictions for 2 years and are treated separately for that period.

  No. of Shares Pool of actual qualifying expenditure
Restricted pool 1 June 2010 400 £1,600
1 July 2011 Further acquisition 500 £2,500
  900 £4,100
Transfer to unrestricted pool 1 June 2012 400 £1,823
Restricted pool 500 £2,277
  No. of Shares Pool of actual qualifying expenditure
Unrestricted pool 1 October 2011 Purchase 600 £3,600
Add transfer from restricted pool 1 June 2012 400 £1,823
Unrestricted pool 1,000 £5,423

After the transfer A still holds two separate pools. The restricted pool consists of 500 shares and the unrestricted pool consists of 1,000 shares.