This part of GOV.UK is being rebuilt – find out what beta means

HMRC internal manual

# Reorganisations of share capital: apportioned cost: use of Interactive Data (Extel): adjustment factors example

The example shows how the adjustment factors for Amstrad PLC Ordinary shares may be applied to the March 1982 value of those shares.

### EXAMPLE

In 1994-95 the adjustment factor for Amstrad PLC 5p ordinary shares held on 31 March 1982 is 0.34282.

This is arrived at by adjusting the given 31 March 1982 value of £2.30 per share as follows.

### 1982-83

There was a one for one bonus issue for which the adjustment factor is given as 0.5. Applying this factor to the March 1982 value gives £2.30 x 0.5 = £1.15.

### 1983-84

The 25p Ordinary shares were split into 5p Ordinary shares. The adjustment factor given is 0.2. Applying this factor to the adjusted value brought forward gives £1.15 x 0.2 = £0.23.

### 1984-85

There was a one for six (1:6) rights issue on payment of 85p per new share. The adjusted value per share to be carried forward is based on the value of £0.23:

• cost of the shares a person would have to hold in order to take up the rights issue ie six shares at 23p per share plus
• indexation on the cost of those six shares up to the date of the rights issue plus
• cost of the rights issue divided by
• the number of shares in the new holding ie six original shares plus one new share = 7

Which is (£1.38 + (£1.38 x 0.123) + £0.85) / 7 = £0.34282

### 1986-87

There was a four for one (4:1) bonus issue for which the adjustment factor is given as 0.2. The adjusted value carried forward is £0.34282 x 0.2 = 0.068564.

### 1994-95

There was a consolidation of five 5p Ordinary shares into one 25p Ordinary share. The adjustment factor is given as 5. The adjusted value per share carried forward is £0.068654 x 5 = £0.34282.

Indexation allowance is only given to the date of the latest rights issue. Therefore, you will have to give indexation allowance from June 1984 to the date of disposal separately, if necessary.

NOTE. If a taxpayer is within the charge to Capital Gains Tax, neither indexation allowance nor taper relief apply to disposals of assets on or after 6 April 2008. Previously indexation allowance had been frozen at April 1998. Companies and other concerns within the charge to Corporation Tax are not affected by these changes. For indexation allowance see CG17207+ and for taper relief see CG17895+.