Share identification rules for corporation tax: section 104 holding: disposals 30/11/93+: example
- January 2005 the taxpayer buys 10,000 shares in A Ltd for £100,000.
- January 2013 the taxpayer sells 5,000 of the shares for £60,000. The allowable costs of disposal are £4,000.
SECTION 104 HOLDING
|Number of shares||Pool of qualifying expenditure||Pool of indexed expenditure|
|January 2005 Purchase||10,000||£100,000||£100,000|
|Indexation £100,000 x 0.301||£30,100|
|January 2013 Disposal||(5,000)||(£50,000)||(£65,050)|
Capital Gains Tax Computation
|Pool of indexed expenditure||£131,300||x||5,000/10,000||£65,050|
|Pool of qualifying expenditure||£100,000||x||5,000/10.000||£50,000|
|Cost of disposal||4,000||54,000|
Only £6,000 of the £15,050 indexation attributable to the disposal has been used in the computation. But the indexed pool of expenditure is reduced by the full amount of the £15,050 (plus cost).