Taxation of Chargeable Gains Act 1992 section 107

Identification of securities etc.: general rules for corporation tax

Section 107 sets out the rules for identifying which securities are being disposed of when a company sells or otherwise disposes of securities, for corporation tax purposes.

• When a company disposes of securities, they must be matched against acquisitions of the same class in a specific order of priority, regardless of how the securities are physically identified in the transaction.
• A ten-day rule applies: if a company acquires securities that would form or add to a section 104 holding and then disposes of securities of the same class within ten days, the disposal is matched against the acquisition rather than the pooled holding, using a first in, first out basis.
• After the ten-day rule, disposals are matched first against the section 104 holding (the main share pool), then against a 1982 holding (pre-April 1982 pool), and finally against any remaining securities on a last in, first out basis.
• Where the ten-day rule applies and the acquisition and disposal fall in different months, no indexation allowance is available on the matched securities.