CG50570 - Share identification rules: CGT treatment of shares from 6.4.98

For the years 1985-86 to 1997-98 the treatment of shares held by taxpayers within the charge to Capital Gains Tax was, with a few exceptions, the same as that for companies within the charge to Corporation Tax. The principal feature of the system was that shares of the same class acquired after 5 April 1982, and held in the same capacity, were pooled in a `Section 104 holding' (called at the time a `new holding'), see CG50590+. There was also a separate regime for `relevant securities', see CG51140+.

This CGT regime had to be changed for 1998-99 onwards. As part of a package of CGT reforms, FA 1998 introduced taper relief, see CG17895+, for all taxpayers within the charge to Capital Gains Tax. The amount of taper due depends on the length of time that the asset in question has been held. It is not possible to tell how long shares have been held if they are pooled in a Section 104 holding. So pooling of shares had to cease. The changes are summarised in CG50548, and described in detail in CG50572+.