Shares and securities
Finance Act 2025 · 2025/26
1 Matching and the basic pool
In this TX lecture: Takeovers and share exchanges are not examined in FTX.
2 Shares and securities
2.1 Gilt edged securities and Qualifying Corporate Bonds
These are exempt assets for individuals.
2.2 Disposal of shares - matching rules
Where shares are disposed of a problem arises in computing the allowable cost as shares in a company may have been acquired over several acquisitions at different costs and on different dates. Therefore HMRC have deemed that when shares in a company are disposed of, they are matched against acquisitions of shares in that company in the following order:
Shares acquired on the same day (as the sale)
Shares acquired within the 30 days following the sale (FIFO)
Shares from the share pool
A separate computation is done for each 'match'.
Note: The matching rules for individuals are different from those that apply to companies.
2.3 The share pool
This keeps a record of the following details of all shares acquired in a company:
number of shares
cost of shares - the number of shares will include all acquisitions including bonus issues and rights issues.
Bonus issues are where a company issues free shares to its existing shareholders on a proportionate basis to the number of shares already owned.
Rights Issues are where a company seeks to raise new share capital and offers its existing shareholders the right to acquire additional shares in the company, at an advantageous price, on a proportionate basis to the number of shares already owned .
the shares disposed of from the share pool will be at the average cost of shares held in that pool.
The share pool is easier to produce for individuals than for companies, for as no indexation allowance applies the only information recorded is number of shares and cost of shares.
Jane owns shares in ABC Ltd. She acquired 1,500 shares in the company on 31 May 2020 for £20,000, and 500 shares on 30 June 2021 for £10,000. On 7 July 2025 Jane bought a further 200 shares in ABC Ltd for £4,000.
Jane sold 1,000 shares in ABC Ltd on 28 June 2025 for £25,000.
Calculate Jane’s capital gain on the disposal of the shares on 28 June 2025.
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3 Bonus issues
Bonus shares: An issue of free shares to existing shareholders in proportion to their existing shareholding.
A bonus issue attaches to the shares that created the entitlement, which means that the share pool is increased by the number of shares acquired in the bonus issue but there is no increase in the cost.
Graham had the following transactions in Alderholt Ltd shares:
February 2021 | Purchased 7,000 shares for £15,000 |
June 2021 | Purchased 1,000 shares for £4,000 |
July 2021 | Bonus issue of one for five |
October 2025 | Sold 5,000 shares for £20,000 |
Calculate Graham's capital gain on the disposal of the shares in October 2025.
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4 Rights issue
Existing shareholders have the right to purchase new shares in proportion to their existing shareholding at a price which is usually below market value.
A rights issue attaches to the shares that created the entitlement, which means that the share pool is increased by the number and cost of shares acquired in the rights issue.
Matt had the following transactions in Bromley Ltd shares:
February 2021 | Purchased 6,000 shares for £15,000 |
June 2021 | Purchased 900 shares for £2,700 |
July 2021 | Took up 1 for 3 rights issue for £3 per share |
September 2025 | Sold 6,000 shares for £24,000 |
Calculate Matt's capital gain on the disposal of the shares in September 2025.
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5 Exempt securities
Gilts and qualifying corporate bonds are exempt for individuals. Do not compute CGT merely because such an investment was sold at a profit. Company treatment is separate.
6 Quoted-share market value
Use the midpoint of the quoted bid and offer prices provided in the question: (lower quotation+upper quotation)/2. Multiply by the number of shares. FTX uses the given quotations; do not confuse the quotation per share with the value of the whole holding.
Noah gifts 100 quoted shares. The given quotations are £4.20–£4.60. Find deemed proceeds.
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Olga sells 600 shares for £3,600. She buys 100 shares on the same day for £500 and 200 shares ten days later for £1,100. Her existing pool holds 1,000 shares costing £4,000. Compute the gain and remaining pool.
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Pranav holds 1,000 pooled shares costing £4,000. A 1-for-4 bonus issue is followed by a 1-for-5 rights issue at £2 a share. Update the pool.