Taxes Consolidation Act 1997 section 581

Disposals of shares or securities within 4 weeks of acquisition

Section 581 is an anti-avoidance measure designed to prevent the manipulation of capital losses through the disposal and reacquisition of shares or securities of the same class within a four-week period.

• Where shares are sold within four weeks of acquiring shares of the same class, the shares disposed of are identified with those recently acquired (overriding the normal FIFO rule)
• If more shares are sold than were acquired in the four-week window, the excess is identified with shares acquired outside that period under the normal first in first out rule
• A loss arising on a disposal where the same class of shares is reacquired within four weeks can only be set off against a gain on the disposal of the reacquired shares, with a proportionate restriction where fewer shares are reacquired
• The four-week identification and loss restriction rules extend to disposals and acquisitions between spouses or civil partners living together, and apply to securities as well as shares