Taxation of Chargeable Gains Act 1992 Schedule 7A paragraph 3

Disposals of pooled assets

Schedule 7A paragraph 3 explains how gains are restricted when a company disposes of assets that form part of a share pool, where some shares in the pool were acquired before and some after the relevant date.

• When a company holds pooled shares (a section 104 holding), a disposal from that pool may include both pre-entry and post-entry shares, and the gain must be apportioned accordingly.
• The pre-entry proportion of the gain is calculated by reference to the number of pre-entry shares in the pool relative to the total number of shares at the time of disposal.
• The pre-entry portion of any gain is subject to restriction, meaning it cannot be set against losses from other group companies or used in ways that the anti-avoidance rules are designed to prevent.
• If all shares in the pool were acquired before the company joined the group, the entire gain on any disposal from the pool is treated as a pre-entry gain and is subject to the restriction in full.

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