Disposal of shares ― individuals

Produced by Tolley

The following Personal Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Disposal of shares ― individuals
  • Matching rules
  • Election for alternative treatment
  • Bonus shares
  • Effect on the matching rules
  • Income tax consequences
  • Rights issues
  • Effect on the matching rules
  • Sale of rights nil paid
  • Scrip issues
  • More...

Disposal of shares ― individuals

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, it is necessary to identify which shares the taxpayer has sold.

The share ‘matching rules’ determine the order in which shares are deemed to have been sold.

These matching rules apply to all shares of the same class held in the same company by the same person held in the same capacity. Therefore, ordinary shares held in certain company by an individual personally cannot be matched with a disposal of ordinary shares in the same company held by that individual in their capacity as a trustee of a settlement.

Matching rules

The matching rules discussed below apply for individuals and trustees only. There are slightly different matching rules for:

  1. disposals of enterprise investment scheme (EIS) shares, seed enterprise investment scheme (SEIS) shares and venture capital trust (VCT) shares, see the Venture capital scheme shares guidance note

  2. disposals of qualifying corporate bonds (QCBs) and non-qualifying corporate bonds (non-QCBs), see the Takeovers guidance note

  3. disposals of shares by companies, see the Share matching rules guidance note

On the disposal of shares, the shares are first matched with acquisitions:

  1. 1)

    made on the

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