VCM66650 - VCT: disposal relief: share pooling: example

This example illustrates how the rules work if a taxpayer owns shares some of which are exempt from CGT and some of which are held in a non-exempt TCGA92/S104 holding, see CG50500 onwards.

A taxpayer makes the following acquisitions of ordinary shares.

  • May 1996 buys 15,000 shares in A plc cost £20,000. A plc is not a VCT.
  • June 1997 buys 60,000 shares in A plc cost £60,000. A plc was approved as a VCT with effect from 6 April 1997.
  • September 1997 buys 50,000 shares in A plc cost £50,000.
  • May 1998 buys 150,000 shares in A plc cost £150,000.

£10,000 worth of the A plc shares bought in September 1997 are acquired in excess of the permitted maximum for 1997-98 and are not exempt from CGT. These shares will be included with the taxpayer's existing Section 104 holding of 15,000 shares acquired in May 1996 before A plc was approved as a VCT. The pooling rules do not apply to the purchase in June 1997 and £40,000 worth of the shares acquired in September 1997.

For CGT purposes the taxpayer has five separate blocks of A plc shares:

60,000 shares acquired June 1997Exempt
40,000 shares acquired September 1997Exempt
A Section 104 holding of 25,000 sharesNot exempt

Section 104 Holding


Number of Shares
Pool of Qualifying Expenditure
Pool of Indexed Expenditure
May 199615,000
£20,000
£20,000
Indexation May 1996-Sept 1997



£1,840

15,000
£20,000
£20,840
September 199710,000
£10,000
£10,000

25,000
£30,000
£30,840

Indexation allowance has been frozen at April 1998, see CG17207.

100,000 shares acquired May 1998Exempt
50,000 shares acquired May 1998not exempt