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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Capital distributions: rights issue: no gain/no loss transfer: computation

Therefore, you apportion the allowable cost and indexation allowance in the normal way by reference to market values as shown in the example in CG57857. In the example, if Mr Butcher transferred the rights nil paid to his wife, Mrs Butcher would have acquired the rights at a cost of £2,070. The indexation allowance becomes part of her relevant allowable expenditure. See CG17700+ if the transferee disposes of the rights or shares acquired as a result of taking up the rights on or after 30 November 1993 and the computation shows a loss after indexation.

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+.