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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Reorganisations of share capital: introduction: apportioning the cost of the new holding

Apportioning acquisition costs

After a reorganisation, the ‘new holding’ consists of both the original shares and the new shares or debentures, of whatever class. It is therefore not the same thing as a section 104 holding. The cost of the new holding will be the sum of the acquisition costs of both elements. If only part of the new holding is disposed of it may be necessary to apportion the total cost between what is disposed of and what is retained. There are special rules for this. If the shares or debentures are unquoted you make the apportionment by reference to the market value at the date of the later disposal which occasions the computation (TCGA92/S129). If any of the shares or debentures are quoted you make the apportionment by reference to the market values at the date of the reorganisation (TCGA92/S130). For guidance on the apportionment of the cost of original shares between classes of share in a new holding see CG51890+