30 day share matching & impact on residual Section 104 holding

Milltir

I have shares from my company in a vested share account and I have belatedly set up a Section 104 holding spreadsheet based on the HMRC "Example 3" HS284 Example 3 2019 (publishing.service.gov.uk) so I can try to understand the calculations myself but am struggling with the share matching and how this affects the remaining Section 104 holding.

Taking HMRC Example 3 as a basis and assuming that last sale was 1st February 2018, if on 25th February Ms Pierson buys 150 Lobster shares at £5.00 and a dealing cost of £80 then the 30 day share matching rule comes into play.
1. Does the HMRC Example 3 gain of £329 become £98 as follows?
Sale proceeds: (400 x £5.20) - £105 = £1,975
30 day match: (150 x £5.00) + £80 = £830
S104 balance: (250/800) x £3,349 = £1,047 (where 800 shares with £3,349 pool of actual cost was the situation before the action on 1st February)
"Composite" allowable cost: £830 + £1.047 = £1,877
Gain: £1,975 - £1,877 = £98

2. How does this impact the residual Section 104 holding?
In HMRC Example 3, the allowable cost for the last action (sale of 400 shares) on 1st February, with no subseqent actions was £1,675. With the purchase of shares on 25th February does the allowable cost for that action change from £1,675 to £1.877? Or does it stay as £1,675? 

Any guidance appreciated.

EthicsGradient

I think the thing to do is keep the transaction costs out until working out gains. This doesn't affect your calculation for the gain due to this February sale (and purchase), but it may make clearer how to calculate the remaing S104 holding. So:

Feb 1st sale proceeds: (400 x £5.20) = £2,080

30 day match: (150 x £5.00) = £750

S104 balance: (250/800) x £3,349 = £1,047 (where 800 shares with £3,349 pool of actual cost was the situation before the action on 1st February)

"Composite" allowable cost: £750 + £80 + £1,047 = £1,877

Gain: £2,080 - £105 - £1,877 = £98

Remaining S104 pool is 800 - 250 = 550 shares, with the adjusted cost of £3,349 - £1,047 = £2,302

Note that this gives the cost per share 2302/550 = £4.186 is still the same as it was before February = 3349/800 = £4.186.

Milltir

EthicsGradient said:

I think the thing to do is keep the transaction costs out until working out gains. This doesn't affect your calculation for the gain due to this February sale (and purchase), but it may make clearer how to calculate the remaing S104 holding. So:

Feb 1st sale proceeds: (400 x £5.20) = £2,080

30 day match: (150 x £5.00) = £750

S104 balance: (250/800) x £3,349 = £1,047 (where 800 shares with £3,349 pool of actual cost was the situation before the action on 1st February)

"Composite" allowable cost: £750 + £80 + £1,047 = £1,877

Gain: £2,080 - £105 - £1,877 = £98

Remaining S104 pool is 800 - 250 = 550 shares, with the adjusted cost of £3,349 - £1,047 = £2,302

Note that this gives the cost per share 2302/550 = £4.186 is still the same as it was before February = 3349/800 = £4.186.

Thanks for the response, it was where I was heading, but nice to get another opinion.