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HMRC internal manual

Capital Gains Manual

Reorganisations of share capital: apportioning costs at the date of reorganisation

The major difference between TCGA92/S130 and the rule in TCGA92/S129 is that under section 130 you apportion the cost of the new holding effectively at the time of the reorganisation rather than at the time of the later part-disposal of the new holding. This gives the shareholder the advantage of knowing the base cost of his or her shares in advance of any disposal. It also avoids some of the difficulties with the interaction between the reorganisation provisions and the pooling rules in TCGA92/S104.

You make the apportionment by reference to the market value of the different classes of share or debenture on the first day for which a market value or price is quoted or published after the new holding comes into existence (see CG51995).

If all the shares and debentures in the new holding are listed you can use the figures in Interactive Data (formerly Extel). That publication gives the market value for the shares and debentures included in a bonus or rights issue on the first day of dealing. This is normally the day the original shares are traded ‘ex rights’ and ‘ex cap’ (bonus issues). The ‘ex’ date is the day the original shares are traded without the entitlement to receive the bonus issue or take up the rights issue.

If any of the shares or debentures in the new holding remain unquoted at the end of the three month period allowed by TCGA92/S130(1) then you will need to get a value from Shares and Assets Valuation in the usual way, see CG59540.