The Inland Revenue Matching Rules provide the guidelines for calculating capital gains tax on sales of shares purchased in tranches over a period of time. These rules seek to match the purchase cost against the sale, in order to calculate the gain. Unfortunately, the calculations can be quite complex.

Sales of shares are matched first against:
1) shares acquired on the same day as those sold
2) shares acquired in the 30 days following the sale (on a “first-in, first-out” basis if more than one purchase was made during this period)
3) shares acquired between 6 April 1998 and the day before the date of sale (on a “last-in, first-out” basis if more than one purchase was made during this period)
4) a pool of all shares in that company acquired between 6 April 1982 and 5 April 1998
5) a pool of all shares in that company acquired before 6 April 1982 at cost, or valued as at 31 March 1982 if acquired before this date
6) shares acquired more than 30 days after the sale was made, if the individual had taken a short position on the stock.

However, if your capital gain is below the annual personal allowance (£9,200 in the 2007/08 tax year), or the shares are purchased within an ISA wrapper, there is no need to undertake these calculations.