Taxes Consolidation Act 1997 section 580

Shares, securities, etc: identification

Section 580 sets out the "first in, first out" (FIFO) rule for identifying which shares are treated as disposed of when a shareholder sells part of a holding of shares of the same class.

• When shares of the same class are sold, they are matched with the earliest acquisitions first (the FIFO rule), so that the shares acquired longest ago are treated as disposed of before shares acquired more recently.
• Shares are regarded as being of the same class if they would be so treated under stock exchange practice, regardless of how they are described or identified in the disposal documentation.
• The FIFO rule applies equally to securities, and to any assets (such as commodity futures) that can be dealt in without identifying the particular items disposed of or acquired.
• Special transitional rules apply to shares that were subject to the pooling system under the Capital Gains Tax Act 1975 and were held on 6 April 1978, so that the original acquisition dates and costs of each block of shares can be reconstructed for FIFO purposes.