CGT jargon buster

Capital Gains Tax comes with a lot of unfamiliar words. Here's every term and acronym used across these guides, explained in plain English. Skim it, or come back whenever a guide uses something you don't recognise.

Common terms Acronyms & abbreviations

Common terms

Capital gain: also: gain, profit; The profit you make when you sell (or otherwise dispose of) an asset for more than it cost you. It's the gain — not the total sale amount — that can be taxed.
Capital loss: also: loss; The opposite of a gain: when you sell an asset for less than it cost. Losses can be set against gains to reduce your tax, and unused losses can usually be carried forward to future years.
Disposal: also: disposing of an asset; Any time you part with an asset — usually a sale, but also gifting it, transferring it to someone, or swapping it (for example crypto-to-crypto). A disposal is the event that can trigger a gain or loss.
Acquisition: also: buy, purchase; Getting hold of an asset — typically buying it, but also receiving it (for example when shares vest from an employer). Acquisitions are what disposals are matched against.
Proceeds: also: disposal proceeds, sale value; The amount you receive when you dispose of an asset (the sale price × quantity). On a sale, dealing fees are taken off the proceeds.
Allowable cost: also: base cost, cost basis, allowable expenditure; The part of what you paid that HMRC lets you subtract from the proceeds to work out the gain. It's the purchase price of the shares disposed of, plus dealing fees and stamp duty. Gain = proceeds − allowable cost.
Section 104 pool: also: the pool, pooled holding, s104 holding; When you buy the same share more than once, HMRC merges your holdings into one “pot” that tracks the total number of shares and their total cost, giving a single average cost per share. Full guide →
Average cost: also: weighted average cost, pooled cost; The pool's total cost divided by the total number of shares in it. When you sell from the pool, this is the cost used for each share — not the price of any particular purchase.
Matching rules: also: share identification rules; HMRC's fixed order for deciding which shares a sale is matched against: same-day first, then the 30-day rule, then the Section 104 pool. The match decides which cost you subtract. Overview →
Same-day rule: Shares you buy and sell on the same day are matched against each other first, before the pool. Full guide →
Bed and breakfast rule: also: 30-day rule; If you sell shares and buy the same ones back within the next 30 days, the sale is matched to that buy-back instead of the pool. Named after an old sell-at-night, buy-at-breakfast tactic. Full guide →
Merging: also: aggregation; Before matching, all your same-day purchases of one share are combined into a single purchase (and all same-day sales into a single sale), at their average price. Full guide →
No gain, no loss: also: no-gain/no-loss transfer; A transfer treated as producing neither a gain nor a loss, so no tax is due at that point. Transfers between spouses or civil partners are the main example — the receiver inherits the original cost. Full guide →
Annual exempt amount: also: tax-free allowance, CGT allowance; The amount of gain you can make each tax year before any CGT is due (£3,000.00 for individuals in recent years). It can't be carried forward — use it or lose it. Current figures →
Taxable gain: What's left of your total gains for the year after losses and the annual exempt amount are taken off. This is the figure your CGT rate is applied to.
Reporting threshold: A proceeds figure (£50,000.00 from 2023/24) above which you must report your disposals to HMRC even if no tax is due. More →
Tax year: also: year of assessment; The UK tax year runs 6 April to 5 April. Gains are totted up per tax year, and each year has its own allowance.
Basic-rate band: The slice of income taxed at the basic rate. Your gains are stacked on top of your income: the part of a gain that still fits within this band is taxed at the lower CGT rate, the rest at the higher rate.
Disposal proceeds vs. gain: A common confusion: proceeds are the whole amount you sold for; the gain is only the profit (proceeds − allowable cost). CGT is charged on the gain, but the reporting threshold is based on proceeds.
Self Assessment: HMRC's system for reporting income and gains that aren't taxed automatically. Most people report capital gains on shares through their Self Assessment tax return.
Stock split: When a company divides each existing share into more shares (e.g. 2-for-1). Your number of shares changes but your total cost doesn't, so the average cost per share falls proportionally.
Transfer: Moving shares to someone else without a normal sale. To a spouse or civil partner it's no gain/no loss; the calculator models it as a “Transfer”. Full guide →

Acronyms & abbreviations

CGT: Capital Gains Tax
The tax on the gain you make when you dispose of an asset.
AEA: Annual Exempt Amount
The yearly tax-free allowance for capital gains.
B&B: Bed and Breakfast
The 30-day rule that matches a sale to a quick buy-back.
S104: Section 104 (holding/pool)
The pooled, average-cost holding for shares of the same class.
HMRC: His Majesty's Revenue & Customs
The UK tax authority you report and pay to.
ISA: Individual Savings Account
A tax-free wrapper; gains inside an ISA are exempt from CGT.
SIPP: Self-Invested Personal Pension
A pension wrapper; investments inside it are exempt from CGT.
ETF: Exchange-Traded Fund
A fund traded like a share; pooled and matched the same way as shares.
RSU: Restricted Stock Unit
Employer shares that vest over time; their cost basis is the value at vest.
FX: Foreign Exchange (rate)
The rate used to convert a foreign-currency trade into GBP for CGT.
SA: Self Assessment
HMRC's system for reporting gains that aren't taxed at source.
TCGA: Taxation of Chargeable Gains Act 1992
The law that sets out the CGT rules referenced in these guides.

New to all this? Start with getting started with CGT, then work through the matching-rule guides.