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This example illustrates how the rules work if a taxpayer owns shares some of which are exempt from CGT and some of which are held in a non-exempt TCGA92/S104 holding. See alsoCG50500 onwards.

A taxpayer makes the following acquisitions of ordinary shares.

• May 1996 buys 15,000 shares in A plc cost 拢20,000. A plc is not a VCT.
• June 1997 buys 60,000 shares in A plc cost 拢60,000. A plc was approved as a VCT with effect from 6 April 1997.
• September 1997 buys 50,000 shares in A plc cost 拢50,000.
• May 1998 buys 150,000 shares in A plc cost 拢150,000.

拢10,000 worth of the A plc shares bought in September 1997 are acquired in excess of the permitted maximum for 1997-98 and are not exempt from CGT. These shares will be included with the taxpayer鈥檚 existing Section 104 holding of 15,000 shares acquired in May 1996 before A plc was approved as a VCT. The pooling rules do not apply to the purchase in June 1997 and 拢40,000 worth of the shares acquired in September 1997.

For CGT purposes the taxpayer has five separate blocks of A plc shares:

(1) 60,000 shares acquired June 1997 Exempt

(2) 40,000 shares acquired September 1997 Exempt

(3) A Section 104 holding of 25,000 shares Not exempt

Section 104 Holding

-	Number of Shares	Pool of Qualifying Expenditure	Pool of Indexed Expenditure
May 1996	15,000	拢20,000	拢20,000
Indexation May 1996-Sept 1997	-	-	拢1,840
-	15,000	拢20,000	拢20,840
September 1997	10,000	拢10,000	拢10,000
-	25,000	拢30,000	拢30,840

Indexation allowance has been frozen at April 1998, see CG17207.

(4) 100,000 shares acquired May 1998 Exempt

(5) 50,000 shares acquired May 1998 Not exempt