What is a section 104 pool for shares?
Answered 11 March 2026
Here is a comprehensive explanation of a section 104 pool for shares.
What the law says
Definition and core rule
Under TCGA 1992, s.104(1), any number of securities of the same class acquired by the same person in the same capacity are to be regarded as indistinguishable parts of a single asset, growing or diminishing as additional securities are acquired or some are disposed of.
A "section 104 holding" is formally defined in TCGA 1992, s.104(3) as "a holding of securities which, by virtue of subsection (1), is to be regarded as a single asset".
Part disposals
Because the section 104 holding is treated as a single asset, a disposal of less than the whole holding is treated as a disposal of part of an asset, and the part-disposal provisions of the Act apply accordingly (TCGA 1992, s.104(6)).
Exclusions
The pooling rules do not apply to "relevant securities" as defined in TCGA 1992, s.108 (e.g. qualifying corporate bonds and certain gilts), because those rules require identification of individual securities.
For corporation tax purposes, s.104(2) provides that the pooling rule does not apply to securities acquired by a company before 1 April 1982.
HMRC guidance / practice
What the pool is
HMRC describes the section 104 holding simply as "the share pool" — a pool of qualifying expenditure referable to the number of shares in the holding. All shares in the holding are regarded as indistinguishable parts of a single asset which grows or shrinks as shares are acquired or disposed of.
What goes into the pool
The pool of qualifying expenditure includes all expenditure on the shares allowable under TCGA 1992, s.38(1)(a) and (b) — i.e. the cost of the shares and the costs of acquisition.
For disposals on or after 6 April 2008, all shares of the same class in the same company acquired from 1 April 1982 onwards by a person within the charge to CGT are pooled in a section 104 holding. Any shares held on 6 April 1982 are included at their 31 March 1982 value (not original cost).
How the pool changes over time
The value of the pool is adjusted every time there is an event that reduces or increases the pool of qualifying expenditure — usually an acquisition or disposal of shares. For example, taking up a rights issue increases the pool by the amount paid, even though under TCGA 1992, s.127 no new asset is treated as acquired.
Shares that do NOT enter the pool
Shares identified under the "same day" or "bed and breakfasting" (30-day) identification rules do not become part of the pool.
Calculating the gain on disposal
On a disposal of shares from the pool, the associated cost is calculated either by applying the part-disposal formula of TCGA 1992, s.42 (the A/A+B formula) or by making a simple apportionment by reference to the number of shares in the pool.
No indexation for CGT (individuals)
For disposals on or after 6 April 2008 by individuals within the charge to CGT, no indexation allowance is included in any calculation. (Indexation continues to apply for companies subject to corporation tax, governed by TCGA 1992, s.110.)
Historical note
The term "section 104 holding" replaced the old term "new holding" when the share identification rules were revised by FA 1998.
Summary
In short, a section 104 pool is the mechanism by which all shares of the same class in the same company held by the same person are merged into a single notional asset for CGT purposes. Rather than tracking the cost of each individual share, you maintain a running total of the number of shares and their aggregate allowable cost. When shares are sold, a proportionate slice of that pooled cost is deducted to compute the gain.
Citation sources
TCGA92/S126(1)(b) defines ‘new holding’ by reference to the original shares (see above) as the shares in and debentures of the company which, as a result of the reorganisation, represent the original shares (including such, if any, of the original shares as remain). Note that a reorganisation of share capital can involve an issue of debentures as well as or instead of an issue of shares. In a bonus or rights issue the new holding will include the original shares as well as the newly issued share
Share pooling was reintroduced for disposals on or after 6 April 2008 for those within the charge to Capital Gains Tax. Shares of the same class in the same company acquired at any time by a person in the same capacity will normally become part of the Section 104 holding. The Section 104 holding is simply the share pool. However, shares that are identified with acquisitions under the ‘same day’ or `bed and breakfasting’ identification rules do not become part of the pool. The Section 104 holding
From 6 April 2008 all shares of the same class in the same company acquired from 1 April 1982 onwards by a person within the charge to capital gains tax are pooled in a Section 104 holding. See CG51570 for details of how to create a holding from shares acquired before that date. This is known as a `Section 104 holding’. All the shares in the Section 104 holding are regarded as indistinguishable parts of a single asset which grows or shrinks as shares are acquired or disposed of. For capital gain
urities constituting or forming part of the section 104 holding which were held by the person making the disposal on 31 March 1982. 4 For the purposes of this Chapter securities of a company which are held— a by a person who acquired them as an employee of the company or of any other person, and b on terms which for the time being restrict his right to dispose of them, shall (notwithstanding that they would otherwise fall to be treated as of the same class) be treated as of a different class fro
The ordinary share pooling and identification rules do not apply to ‘relevant securities’, as that term is defined at TCGA92/S108. This is because the rules relating to relevant securities require the identification of individual securities and this would not be possible if they had lost their identity in a Section 104 pool. For further guidance on relevant securities see CG51650. It is possible that a share reorganisation may involve an issue of relevant securities in respect of shares in a Sec
Where shares that were acquired before 6 April 2008 are disposed of on or after that date it will usually be necessary to create a Section 104 pool to calculate the chargeable gain although this step will be academic where all of the shares held are disposed of in a single transaction or in the same tax year. A S104 pool is simply the amount of qualifying expenditure that relates to the number of shares in the holding. The number of shares held and the related cost will comprise - shares still h
Part IV Shares, securities, options etc. Chapter I General Share pooling, identification of securities, and indexation Share pooling: general interpretative provisions. 104 1 Any number of securities of the same class acquired by the same person in the same capacity shall for the purposes of this Act (subject to express provision to the contrary) be regarded as indistinguishable parts of a single asset growing or diminishing on the occasions on which additional securities of the same class are a