CG50575 - Share identification rules: CGT treatment of shares from 6.4.98: clogged shares

Shares are held separately if they are acquired as an employee on terms which restrict their right to dispose of them, TCGA92/S104(4). This applies to any employee, not merely an employee of the company issuing the shares.

• IDENTIFICATION OF DISPOSALS

If the taxpayer holds `unclogged shares' (in other words, shares which he acquired otherwise than as an employee with restricted disposal rights) as well as clogged shares, there is no rule for identifying whether it is clogged or unclogged shares which have been disposed of. In practice it should be possible to identify as a matter of fact which shares have been sold. If clogged shares have been sold this will usually involve lifting the restrictions on the rights to dispose of them. If it is not possible to identify whether clogged or unclogged shares were sold you should accept the taxpayer's allocation. For further details on employee share schemes, see CG56300+.