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HMRC internal manual

Capital Gains Manual

Shares acquired on same day: election for alternative treatment: what is the alternative treatment

The alternative treatment is

  • First, the shares acquired on the same day are divided into two groups, the approved-scheme shares, see CG56461, and all other shares, however these were acquired. Each of these two groups is treated as being acquired by one separate transaction.

Note that all shares acquired by exercising EMI option(s) within 10 years of grant will normally belong to the approved-scheme shares group but shares acquired by exercising option(s) under a Company Share Option Plan or SAYE option scheme only belong to the approved-scheme shares group if no Income Tax charge was incurred when the option was exercised.

  • Second, the other shares are treated as disposed of before any of the approved-scheme shares.

The effect is that generally the chargeable gains arising on the first occasion when some of the relevant shares are disposed of are less than they would be under the normal rule. This is because the alternative treatment identifies the shares disposed of as being shares other than the approved-scheme shares as far as this is possible. Generally, shares which are not approved-scheme shares have a higher acquisition cost for Capital Gains Tax purposes.