Commentary

C2.818 Same-day share acquisitions

Capital gains tax
Capital gains tax | Commentary

C2.818 Same-day share acquisitions

Capital gains tax | Commentary

C2.818 Same-day share acquisitions

Finance Act 20021 changed the rules for identifying which shares have been disposed of when there is a part disposal of a holding of shares. It provided an alternative ordering rule for matching disposals with acquisitions where an individual has acquired shares by different transactions on the same day and some of the shares were acquired through an employee share scheme. As indicated in C2.705, the existing rules treat shares of the same class, acquired on the same day by a person acting in the same capacity, as having been acquired in a single transaction, which has the effect of pooling all the acquisitions and averaging out the total cost over all the shares. The alternative rules allow an individual to elect instead to treat shares which carry a higher capital gains tax cost as disposed of in priority to those with a lower cost.

The changes introduced by FA 2002 take effect for shares acquired after 5 April 20022. For this purpose provision is made where shares to which relief under the enterprise investment scheme (EIS) is attributable have been transferred between husband and wife. In such cases, the person to whom the shares were transferred is treated as having acquired the shares on the day they were issued (see below)3.

The first requirement for the alternative ordering rule to apply is that an individual, acting in the same capacity, must have acquired shares of the same class in a company on the same day4. These shares

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