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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Shares acquired on same day: election for alternative treatment: when and how the election can be made

When an individual first disposes of any of the relevant shares, see CG56461, he or she may elect for the alternative treatment to apply. An election must be made within one year and 10 months after the end of the tax year in which the first disposal takes place. If, for example, the first disposal falls in the tax year 2010-11, the election must be made no later than 31 January 2013.

If a shareholder receives or is deemed to receive a capital distribution from a company this is treated as a part disposal of all the shares concerned, TCGA92/122(1), so an election would have no practical effect. A capital distribution includes for example a distribution on a company being liquidated and cash received as part of the terms of a share reorganisation, take-over, or company reconstruction in certain circumstances. These part disposals do not count as first disposals for making a TCGA92/S105A election, see TCGA92/S105B (4). The individual’s right to decide whether to elect or not is therefore preserved until a disposal is made on which an election would have an effect.

The election applies to all the relevant shares. If an election is made, it applies to the first and all subsequent disposals of the shares subject to the election.

An election applies only in respect of the relevant shares of the particular class acquired on the date in question. This gives an individual a choice whether or not to make another election in respect of relevant shares acquired on a different day, or in respect of relevant shares of a different class, or in a different company.

There is no special form for the election. If, before the expiry of the time limit, the individual makes a Self Assessment Return showing the first disposal of shares to be covered by an election, the Return should include the election.