If you're running the Wheel Strategy in a UK taxable account (not an ISA), you need to understand HMRC's Capital Gains Tax (CGT) matching rules. These rules determine which share acquisitions get matched to which disposals, affecting your taxable gains.
The Three Matching Rules
When you dispose of shares (whether by selling, assignment, or covered call exercise), HMRC requires you to match that disposal to acquisitions in this strict order:
- Same-Day Rule – match to shares acquired on the same day
- 30-Day Rule (Bed & Breakfast) – match to shares acquired in the next 30 days
- Section 104 Pool – match to your averaged pool of shares
1. Same-Day Rule
If you buy and sell the same security on the same day, those transactions must be matched first. This prevents you from claiming a loss by selling shares in the morning and buying them back in the afternoon at a lower price.
2. 30-Day Rule (Bed & Breakfast)
If you dispose of shares and acquire the same security within the next 30 days, those acquisitions are matched to the disposal before anything else. This rule was designed to stop "bed and breakfast" trades where investors would sell shares to realise a loss and buy them back the next day.
3. Section 104 Pool
Any remaining shares go into your Section 104 pool – a running average of all your acquisitions. When you dispose of shares (after checking same-day and 30-day rules), they're matched against the average cost in your pool.
How This Applies to the Wheel Strategy
Cash-Secured Put Assignment
When a CSP is assigned, you acquire shares at the strike price. This becomes an acquisition event, adding shares to your Section 104 pool (assuming no same-day or 30-day matches apply).
Covered Call Exercise
When a covered call is exercised (or you buy it back), you dispose of shares. HMRC will match this disposal to:
- Any shares acquired the same day (unlikely for Wheel trades)
- Any shares acquired in the next 30 days
- Shares from your Section 104 pool (most common scenario)
Example Scenario
Timeline
- 1 Jan: CSP assigned → acquire 100 shares at £50 = £5,000
- 15 Jan: Sell 100 shares via CC assignment at £55 = £5,500
Result: No same-day or 30-day matches apply. The 100 shares are taken from your Section 104 pool at the average cost. Your gain is £500 (£5,500 - £5,000).
Why Accrue Matters
Tracking all of this manually in a spreadsheet is error-prone. Accrue automatically:
- Records every acquisition and disposal with the correct dates
- Applies same-day, 30-day, and Section 104 matching rules
- Maintains your Section 104 pool with accurate average cost
- Generates HMRC-ready CGT reports
Learn More
For the full HMRC guidance, seeCG51560 – Share Identification Rules.
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