Section 104 holdings

Hello - I have a question regarding section 104 holdings. I receive RSUs as part of my overall compensation from my employer, which are made available to me via a US broker (my employer is US headquartered). Upon each vesting event, those vested shares are presented to me as a seperate line item in the broker's portal, clearly showing me the acquisition price for each tranche of shares. I have the ability to sell all, or some, of any specific tranche. My question is: if I sell from a particular tranche - where I know the precise acquisition costs for those *specific* shares - do I still need to view these as part of an overall section 104 holding and base my gain on the average acquisition cost across the whole holding? Many thanks, NMDMS

Hi NMDMS,
Please refer to Shares and Capital Gains Tax (Self Assessment helpsheet HS284) and the second choice for examples on S104 holding.
Thank you.

Hi, thanks very much for the example. I understand that if I had a equity trading account and that over time I purchased shares in XYZCo that went into one holding, that when coming to dispose of some or all of that holding that S104 would apply; it makes sense, there is no way to distinguish between purchases at that point. However in my case, I have the ability to sell all or some of a particular purchase; a purchase where I can identify the acquisition price and hence the exact gain or loss of the sale of those shares. Is this irrelevant? i.e. S104 still applies in this scenario? And, by extension, it would mean that it made no difference which tranche of shares I elect to sell (those with the highest acquisition price or the lowest acquisition price)?

Hi NMDMS,

Yes, S104 still applies.

Thank you.
 

Thanks for the guidance, much appreciated

Hi Admin, Following up on this question, I have a similar situation on stock awards received from my employer over the years. My US stock broker provides me with the ability to pick and choose the stocks I can sell in the pool, along with a clear visibility into the purchase price of that stock. If I apply the Sec 104 rule, my CGT is almost double which is a unreasonable impact when I can conclusively demonstrate which tranche i have sold. For eg: my avg price of the pool is GBP 132 and I have sold some of the stocks from the pool which were purchased at GBP 250 and the Sale price is GBP 300 per stock. I have clear documentation from the broker account on the purchase price of the stock as i have selected those tranches. With sec 104 my per stock CGT is (300-132) whereas in reality it should be (300-250). Can I use the latter for calculating the CGT and provide the necessary documentation in the tax filing ?

Hi A C,
If the shares are all in the same company and pool and purchased after 06/04/2008, the conditions at S104 holding apply.
Please see: CG51575 - Share identification rules for capital gains tax from 6.4.2008: the Section 104 holding in detail.
Thank you.