Chapter 12 Capital Gains Tax – Individuals – Shares TX-UK FA2023
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MCQ2: the question says Herbert received £1 shares for every Grey shares. but the teacher over looked that part of the question.
also the question asked for the chargeable gain as a result of the takeover, but the teacher calculated only the cash aspect of the capital gain.
i think capital gains on shares arise only when shares are sold. But when it is paid by cash capital gains arise immediately. Thats why tutor calculated gains arising on cash only.
Here’s a quotation from HMRC’s site-“shares, securities or cash. Unless the issue is completely cash your shares in the old company are replaced with shares, securities or debentures in the new company.
As long as you meet certain conditions you’re not treated as if you’ve sold or disposed of any of the old shares for Capital Gains Tax purposes. One of those conditions is that the reorganisation applies equally to all holders of the class of shares being reorganised.
If the company taking over is listed on a stock exchange the information you get about the takeover will usually say whether these conditions are met”.
I do not understand how were you able to divide those proceeds of 25000. Like the share pool is supposed to have 20000 proceeds and shares acquired within 30 days are supposed to have proceeds of 5000. Can you clarify that for me please
Hi! For the shares in July 7 2023 (which is 30 days following the sale) 200 shares for 4,000. We sold 1,000 shares and so 200/1000(shares)*25,000= 5,000 that is the proceed of the 200 shares and if we less it to 25,000 proceeds will leave us 20,000 proceeds for the remaining 800 shares from the mainpool. Hope this help.