Taxation of Chargeable Gains Act 1992 section 236E

Identification of exempt employee shareholder shares

Section 236E sets out how exempt employee shareholder shares are identified when an employee shareholder disposes of shares, allowing them to specify how many of the shares sold are exempt shares.

• The normal share pooling and identification rules (sections 104, 105 and 106A) are switched off for employee shareholder shares, so that exempt and non-exempt shares are not lumped together.
• Where an employee shareholder holds both exempt and non-exempt shares of the same class in a company, they can choose how many of the shares disposed of are treated as exempt shares, up to the number of exempt shares they actually hold.
• This flexibility allows the shareholder to maximise the CGT exemption by nominating exempt shares as being the ones sold first.
• Shares are only treated as being of the same class if they are recognised as such by a recognised stock exchange.

---