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HMRC internal manual

Capital Gains Manual

Reorganisations of share capital: apportioning costs within the new holding: 1982 holding

When there is a disposal to which indexation allowance applies and shares held at 31 March 1982 (or shares which derived their cost from such shares) were involved, the apportionment of costs and hence the computation of any chargeable gain is a more complex matter. An example would be where there had been a rights issue of a different class of share in respect of a 1982 holding of shares and part of the new holding is disposed of.

If you need guidance in such cases, please refer to Specialist PT (CG Technical) Solihull.

Remember that indexation allowance is due on disposals on or after 6 April 2008 only for the purposes of computing gains chargeable to Corporation Tax. For Income Tax purposes, indexation allowance was due only to April 1998 on disposals which took place between 6 April 1998 and 5 April 2008 (for Corporation Tax purposes indexation allowance continues to be due up to the month of disposal), see CG17207.