Guide

UK capital gains on shares: the pool, and the two rules that jump the queue

Freetrade, Hargreaves Lansdown, Trading 212, Interactive Brokers — whichever you use, the statement shows what you bought and sold. It does not show your Section 104 pool, and the pool is what the gain is worked out from.

Everything of one share merges into one pool

The UK does not track your shares as separate parcels. Every share of the same class in the same company merges into a single Section 104 holding with one average cost. Buy 100 at £5 and 100 at £7 and you hold 200 at an average £6 — there is no "first" 100 left to sell. Sell 50 and the cost taken out is 50 × £6.

This is why holding period does not appear anywhere below: no UK rule turns on how long you held. That surprises people arriving from Australian or American rules, where it decides the rate.

Two rules match before the pool does

Before the pool is touched, a disposal is matched against:

1. Purchases on the same day. Anything you bought the same day you sold is matched first.

2. Purchases in the 30 days AFTER the disposal. This is the one that catches people, because it looks forward. A purchase the day before you sold is ordinary pool; a purchase the day after is matched against that sale. The rule exists to stop "bed and breakfasting" — selling to bank a loss and buying straight back.

When a sale is matched to a later purchase, the proceeds are split by share count, not by cost. Sell 4,000 shares for £6,000 and match 500 of them to a purchase twelve days later, and the proceeds attached to those 500 are 500/4,000 × £6,000 = £750. Apportioning by cost instead is plausible, common, and wrong.

The allowance, and losses

Individuals have an annual exempt amount — a slice of gains taxed at nothing. Losses of the same year come off in full even where that wastes the allowance; losses brought forward from earlier years are restricted so they only reduce gains down to the allowance, not below it. The rate then depends on which band your other income puts you in, which is a fact about your income, not about the shares.

Daybook builds the pool from your own transactions — every purchase averaged in, same-day and 30-day matching applied in the right order, proceeds apportioned by share count — and prepares the working papers as a PDF. Its pooling is checked against HMRC's own worked example in HS284. It runs on your computer; nothing is uploaded.

See what Daybook does →

Free to download. Runs on your computer. Reads Freetrade, Trading 212, Interactive Brokers and more.

Not tax advice. General information about how some UK tax rules apply to investing, not advice about your circumstances and not a substitute for HMRC or a qualified adviser. Rates and the annual exempt amount change; check the current position at gov.uk or with your accountant before you file.

Daybook · Guides: Australia · eToro · United States · Canada · New Zealand · Terms, privacy and refunds