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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Small capital distributions: computation: 1982 holding

An adjustment is required to the 31 March 1982 value of the shareholding if TCGA92/S122 (4) has applied to a small capital distribution made after 31 March 1982 and before 6 April 1988, TCGA92/SCH3/PARA4 (2). The 31 March 1982 value is reduced by the amount of the allowable expenditure which has been set against the earlier gain. This adjustment only applies to disposals made on or after 6 April 1989, see CG16960.

EXAMPLEThe taxpayer has a holding of shares at 31 March 1982 original cost £6,000. After 31 March 1982 and before 6 April 1988 the company makes a capital distribution of £10,000. This is a small capital distribution but it is greater than the taxpayer’s allowable expenditure. The taxpayer makes a claim under TCGA92/S122 (4) (then CGTA79/S72 (4)). The disposal proceeds are reduced by £6,000.

In 1992 the taxpayer sells the rest of the shareholding. The shares have an agreed 31 March 1982 value of £50,000. That 31 March 1982 value is reduced by the amount of the earlier Section 122(4) claim. The value becomes £50,000 - £6,000 = £44,000.