Investors should note that each time they buy shares, it is deemed to be a separate holding for capital gains tax purposes. This means that an individual investor could have a number of holdings in the same company. If shares were acquired before April 6th, 1974, they are deemed to have been purchased at the market value at that date for capital gains tax purposes. When selling the shares which have been acquired in stages over a period, the Revenue uses the FIFO (First in First Out) system to determine which shares have been disposed of. Because of this it is important for investors to keep details of every share purchase and disposal, in order to determine which shares are being sold.

An exception to the FIFO rule is where shares are sold within four weeks of purchase. In this case, the shares sold are deemed to be the most recently acquired shares, even though there may be an older holding of the same class of shares. If shares are sold at a loss and reacquired within four weeks, this loss can only be set against gains made on a subsequent disposal of the reacquired shares and not against other gains.

Where shares are sold at a loss, the loss can be set against other gains and if not utilised, can be carried forward indefinitely. It is important to make a claim for the loss, even though there may be no gains in the particular tax year, since these losses may be needed in the future.