Glossary · UK
What is Section 104 Holding?
A Capital Gains Tax pooling rule that groups identical shares of the same class into a single pool with one average cost.
Full Definition
A Section 104 holding is the standard Capital Gains Tax rule for working out the cost of shares (and similar fungible assets) when you have bought the same class of shares in a company at different times and prices. Rather than tracking each purchase separately, identical shares are treated as a single pool: their costs are added together to give a total pooled cost, and a sale takes an average cost proportionate to the shares disposed of. This avoids having to identify exactly which shares were sold. When calculating a gain, the Section 104 pool is used after first applying the same-day and the 30-day (bed and breakfasting) matching rules. The resulting gain may be taxed for 2026/27 at 18% within the basic-rate band or 24% above it, after deducting the Annual Exempt Amount of GBP 3,000. Understanding pooling matters because it determines your allowable cost and therefore the taxable gain when you sell part of a shareholding built up over time.