06: Identification of securities
If you have bought shares at different times and then you sell some of your holding, it can be important to be able to identify which investments you have sold to be able to compute the taxable gain. Shares and securities you have disposed of are identified with acquisitions you have made in the following order:- Acquisitions made on the same day as the sale.
- Acquisitions within the following 30 days (thereby rendering ‘bed and breakfasting’, ie selling and buying back immediately, ineffective).
- All earlier other acquisitions (as a single pool). This means that you take the average acquisition value and apply it to the number of shares being sold.
Example of pooling of shares
You bought shares in Tectonic PLC on two occasions – you bought 2,000 shares when the price was £4 a share and later you bought another 1,000 shares when the price was £7 a share. So your total pool of 3,000 shares was bought for £15,000 or an average price of £5 a share. So when you come to sell 2,000 shares at £12 a share, your gain will be £14,000 (£24,000 sale value less £10,000 average cost).
