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HMRC internal manual

Capital Gains Manual

From
HM Revenue & Customs
Updated
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Capital distributions: rights issue: part-disposal of rights

It is not uncommon for taxpayers to take up part of their entitlement to a rights issue and sell the balance of the rights nil paid. They may well sell the rights nil paid to help finance the acquisition of the new shares. The value of the property not disposed of in the part-disposal formula, B in TCGA92/S42, depends upon when the taxpayer accepts the allotment of the shares they propose to take up.

SALE OF RIGHTS BEFORE ALLOTMENT ACCEPTED

  • B is the market value of the rights they will retain and the market value of the original shareholding.

SALE OF RIGHTS AFTER ALLOTMENT ACCEPTED

  • B is the market value of the new shares and the market value of the original shareholding.