The following Personal Tax guidance note by Tolley provides comprehensive and up to date tax information covering:
From 6 April 2008, the rules for disposals of shares were greatly simplified. This note does not cover the rules for disposals in 2007/08 and preceding years. For details of those rules, see Simon’s Taxes C2.706 (subscription sensitive).
Special rules are needed for disposals of shares as these are intangible assets that may have been purchased over a long period with different purchase prices. Without the rules set out in the legislation, it would be impossible to match the disposal with the acquisition and thereby calculate the capital gain or loss.
To find the allowable cost (also known as the base cost) for the capital gains tax (CGT) computation, we need to identify which shares the taxpayer has sold.
The share ‘matching rules’ determine the order in which shares are deemed to have been sold.
The matching rules discussed below apply for individuals and trustees only. There are slightly different matching rules for:
On the disposal of shares, the shares are first matched with acquisitions:
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