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Share identification rules - 30 day or same day?

Lots of share purchases and disposals over a short period, which are matched first?

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I have a query on share disposals and the same day/30 days rules which I thought I always knew the answer to but some software has made me doubt myself.

Position

31/12/2021 Pool 700 shares

13/1/2021 Sells 700 shares and the same day buys 500 shares

14/1/2021 Buys 650 shares and sells 600

Same day is always first. So 13/1/2021 the sale of 700 is matched with the 500.  200 unmatched. So we have to look at the next 30 days before the pool.

On 14/1/2021 there is a further purchase and sale.  Is the 200 unmatched above matched with the 650 purchase as we are still dealing with the 13/1 sale, thus the 14/1/21 600 share sale is matched as 450 same day and 150 pool.

OR does the 600 sale on the 14/1 mean that there is only 50 that can be matched to the 200 from 13/1 (as the 600 is matched to the 650).  The 150 unmatched on 13/1/21 will then come from the pool?

Overall the same position applies in that 150 are taken from teh pool somewhere, but I am interested in the correct way of doing this?

My opinion is 'same day' always applies first, so the 14/1 600 dispsoal is matched with the 650 purchase leaving only 50 that can be matched with the 13/1/21 disposal.

Interested in views as I have used a website calcualtor and a piece of software. One does one way and the website the other!

Thanks.

Replies (6)

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Replying to David Ex:
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By Mister E
12th May 2021 10:06

I read that and more importantly this https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg51560
as same day must come first. Under CG51560 it states:
"This rule (30 day) has priority over all other identification rules except the `same day’ rule in TCGA92/S105(1), see above."

So I am interested in others views on this.
If the software had not dealt with a different way I would not question it and would do same day first.
I can find no examples that confirms either way.

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Replying to Mister E:
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By David Ex
12th May 2021 10:20

Mister E wrote:

If the software had not dealt with a different way I would not question it and would do same day first.
I can find no examples that confirms either way.

If HMRC manuals and your own understanding disagree with the software, I’d speak to the software provider.

If you say what the software is, others may have experience to share.

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Replying to David Ex:
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By Mister E
12th May 2021 10:32

Yes I think I will speak with them.
It is CCH gains.
I also did a test on http://www.cgtcalculator.com/calculator.aspx and that agreed with my view.
Thanks.

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By Tax Dragon
12th May 2021 18:08

The answer is (of course) in the legislation. (I confess I missed it first time round... note to self [can't believe I need reminding!... an element of 'familiarity breeds contempt' in this case, I confess... which is a bit ironic as I read the story of the fox and the lion to the little one this morning!] always read the whole section.)

The same day rule is s105 TCGA.
The 30 day rule comes in s106A. I read as far as s106A(4) and thought "oh, so 30-day rule takes precedence in the OP's scenario? That wasn't what I was expecting!" (or thoughts to that effect). I flipped back to s105 to see what I'd done wrong. Stupid. I should instead have read on - it's s106A(9) overrules s106A(4) and declares the same day rule the winner.

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Replying to Tax Dragon:
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By Mister E
12th May 2021 19:08

Thank you Tax Dragon, and for the legislative confirmation, I had not realised S106A(9) overrides the 30 day rule.
It makes sense to me and has always been my understanding of it.

Quite agree with your familiarity breeds contempt comment....I was also slightly embarrassed to ask the question for something that we all take for granted we know so well.

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