The Section 104 Share Pool Explained, With Worked Examples
A Section 104 pool is how HMRC works out the cost of shares you bought at different times: all your shares of the same class in one company go into a single pool with one running total cost, and each sale takes the average cost.2 Before the pool is used, a sale is matched first with shares bought the same day, then with shares bought in the next 30 days.1 Example 1 below: 900 shares sold from a 1,500-share pool costing £7,055 take £4,233 of cost.
- Matching order for a sale: same day, then the next 30 days, then the Section 104 pool.2
- The pool cost includes broker fees and stamp duty paid on each purchase; sale fees reduce the proceeds.1
- Shares in an ISA or pension are outside CGT and never enter the pool.
- Each class of shares in each company, and each fund share class, is a separate pool. Holdings of the same shares with different brokers form one pool.
- 2026/27: £3,000 annual exempt amount, then 18% within your basic-rate band and 24% above it.34
How does the Section 104 pool work?
Think of the pool as a running account with two numbers: how many shares you hold and their total allowable cost.2
- A purchase adds the shares and their full cost (price, broker fee, stamp duty) to the pool.
- A sale from the pool removes the shares and a proportionate slice of the cost: total cost × shares sold ÷ shares in the pool.
- What is left carries forward at the same average cost per share.
You need the pool for every holding you have added to over time, including regular investment plans and dividend reinvestment. It is named after section 104 of the Taxation of Chargeable Gains Act 1992.
Example 1: building the pool and selling part of it
| Event | Shares in pool | Pool cost |
|---|---|---|
| March 2019: buy 1,000 at £4.00 (£4,000 + £10 fee + £20 stamp duty) | 1,000 | £4,030 |
| June 2021: buy 500 at £6.00 (£3,000 + £10 fee + £15 stamp duty) | 1,500 | £7,055 |
| November 2026: sell 900. Cost taken: £7,055 × 900 ÷ 1,500 | −900 | −£4,233 |
| Left in the pool | 600 | £2,822 |
| Proceeds: 900 × £9.00 less £10 fee | £8,090 |
| Less pooled cost | −£4,233 |
| Gain | £3,857 |
| Less annual exempt amount | −£3,000 |
| Taxable gain (CGT £154.26 at 18%, £205.68 at 24%) | £857 |
The 600 shares left keep an average cost of £4.7033 each (£2,822 ÷ 600). The next sale from the pool starts from those figures.
Before you pay HMRC, check every cost, loss and relief is in your figures: get your CGT Check report, £4.99 →
Which shares are matched before the pool?
The pool is the last step. HMRC's identification rules match a sale in this order:2
- Same-day rule: shares of the same company bought on the same day as the sale.
- 30-day rule (bed and breakfasting): shares bought in the 30 days after the sale, earliest first.
- Section 104 pool: everything else, at average cost.
Shares matched under rules 1 and 2 never enter the pool: their cost is used straight away against the sale. Our 30-day rule guide covers the planning angle, including bed-and-ISA and bed-and-spouse.
Example 2: a sale with same-day and 30-day purchases
Jo holds 2,000 shares with a pool cost of £10,000 (£5.00 each). On 10 December 2026 she sells 1,000 at £8.00. The same day she buys 200 back at £8.00, and on 28 December 2026 she buys 300 at £7.50. Fees are ignored to keep the arithmetic clear.
| Matched with | Proceeds | Cost | Gain |
|---|---|---|---|
| 200 bought the same day | £1,600 | £1,600 | £0 |
| 300 bought on 28 December (within 30 days) | £2,400 | £2,250 | £150 |
| 500 from the pool (£10,000 × 500 ÷ 2,000) | £4,000 | £2,500 | £1,500 |
| Total | £8,000 | £6,350 | £1,650 |
Her pool afterwards is 1,500 shares costing £7,500. Had all 1,000 come from the pool, the gain would have been £3,000. Buying back within 30 days changed which cost was used: here it lowered the gain, but if the price had risen it would have raised it.
What changes the pool without a sale?
- Bonus issues, splits and consolidations: the number of shares changes, the total cost does not, and nothing is disposed of.
- Rights issues: the new shares join the pool and the money you paid for them is added to the cost.
- Scrip dividends: shares taken instead of a cash dividend join the pool, with the cash dividend you gave up as their cost.
- Accumulation units in a fund: income that is reinvested and taxed as yours each year is added to the pool cost, so you are not taxed on it twice when you sell.
- Takeovers paid in new shares: usually the new shares inherit the old pool's cost, with no disposal until you sell them.
Employee share schemes such as SAYE, EMI and share incentive plans have their own rules for what counts as cost; Helpsheet HS284 explains how they interact with the pool.2
How do you report a pooled gain?
Report through Self Assessment or HMRC's real-time CGT service and attach your pool calculation: see how to report CGT. If you sold more than £50,000 of shares in the year and you file a tax return, the capital gains pages are needed even if there is no tax to pay. Keep contract notes for every purchase since you first bought the shares, because the pool depends on all of them: CGT records explains what to keep.
Let the calculator build your pool
Enter each purchase and sale; the shares calculator applies the same-day, 30-day and Section 104 rules and shows the 2026/27 tax.
Open the shares CGT calculatorFrequently asked questions
What is a Section 104 pool?
It is the way HMRC averages the cost of shares of the same class in the same company that you bought on different dates. All the shares go into one pool with one total cost, and each sale takes a proportionate slice of that cost.
Do dealing fees and stamp duty go into the pool?
Yes. Broker fees and the 0.5% stamp duty on a purchase are added to the pool cost. Fees on a sale are deducted from the sale proceeds.
Which shares are matched first when I sell?
Shares bought the same day, then shares bought in the next 30 days, then the Section 104 pool. Only the pool uses the average cost.
Do I need a separate pool for each broker or ISA?
Shares held in an ISA or pension are outside CGT and are not in the pool. Shares of the same company held with two different brokers outside an ISA form one pool.
Does a share split change the pool?
A split or consolidation changes the number of shares but not the total cost. It is not a disposal.
This page is general information, not tax advice. It follows HMRC Helpsheet HS284 and GOV.UK's "Tax when you sell shares" guidance as checked on 18 October 2026. Employee share schemes and corporate actions can need specialist advice.
Sources & references
The rates, allowances and rules in this guide are drawn from the official HMRC and GOV.UK sources below, checked for the 2026/27 tax year. Each link opens the relevant government page in a new tab.
- Tax when you sell shares: work out your gain www.gov.uk/tax-sell-shares/work-out-your-gain
- Shares and Capital Gains Tax (Helpsheet HS284) www.gov.uk/government/publications/shares-and-capital-gains-tax-hs284-self-assessment-helpsheet
- Capital Gains Tax: rates www.gov.uk/capital-gains-tax/rates
- Capital Gains Tax: allowances (annual exempt amount) www.gov.uk/capital-gains-tax/allowances