Section 104 Pool Deep Dive — Worked Examples With Real Numbers

The Section 104 pool is the workhorse of UK share CGT. Most disposals by ordinary investors end up matched against the pool — same-day and 30-day matching are edge cases. Yet many people have a shaky understanding of how the pool actually works. Let’s fix that with proper numbers.

What the pool is

Under TCGA 1992 s.104, all shares of the same class in the same company are grouped into a single pool. The pool tracks two running totals: total shares and total cost. The average cost per share is total cost ÷ total shares.

Every purchase increases both totals. Every sale decreases both totals proportionally. HMRC Helpsheet HS284 describes this as “each share in the holding is treated as if acquired at the same average cost.”

Example 1: Building and selling from a pool

The November sale: cost allocated = 200 × £5.289 = £1,057.78. Proceeds = 200 × £7.80 = £1,560. Gain: £502.22.

After the sale, 250 shares remain with a cost of £1,322.22 (= £2,380 − £1,057.78). The average cost per share hasn’t changed — it’s still £5.289. Selling from the pool never changes the average; only buying more shares at a different price changes it.

Example 2: Multiple sells eroding the pool

Continuing from above — Emma sells in tranches:

Each sell allocates cost proportionally: shares sold ÷ pool quantity × pool cost. The loss in May is an allowable capital loss that offsets the February and September gains.

Example 3: Stock split within the pool

Using the original pool of 450 shares at £2,380 total cost. Suppose the company does a 2:1 stock split:

Before split: 450 shares, £2,380 cost, £5.289 average.
After split: 900 shares, £2,380 cost, £2.644 average.

Total cost unchanged. Shares doubled. Average halved. No disposal, no CGT event. This is the standard treatment under TCGA 1992 ss.126-131.

Example 4: Pool interaction with the 30-day rule

Pool: 500 shares, total cost £4,000, average £8.00. On 1 March, you sell 200 at £12.00. On 20 March (within 30 days), you buy 200 at £11.50.

The 30-day rule matches first. The 200 sold are matched to the 200 bought at £11.50 — not the pool. Gain = (200 × £12) − (200 × £11.50) = £100.

The pool is unaffected. It still has 500 shares at £4,000. The 200 shares bought on 20 March don’t enter the pool — they’ve been consumed by the 30-day match. See our matching rules guide for the full priority order.

Fees in the pool

Broker commissions and stamp duty are added to the pool cost at the time of purchase. A purchase of 100 shares at £5.00 with £11.95 commission and £2.50 stamp duty enters the pool as 100 shares with a cost of £514.45 — not £500.

Track it properly

Doing this manually across dozens of trades in multiple companies — with splits, fees, and 30-day interactions — is where spreadsheets break down. TaxBull tracks the Section 104 pool for every holding automatically, showing the pool state after every transaction. You can verify the numbers against these examples to confirm it’s working correctly.

This is general information with simplified examples. Real portfolios involve additional complexity. Consult a tax professional if you’re uncertain about your specific calculations.