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HMRC internal manual

Capital Gains Manual

Share valuation: 1982 holding of unquoted shares general rules

This guidance deals with the particular issues associated with the valuation of a holding of unquoted shares at 31 March 1982 which is a “1982 holding” for share identification purposes.

The issues concern -

  • part disposals, see CG59581
  • a person also owns shares of the same class in the same company acquired before 7 April 1965, see CG59582
  • there have been share reorganisations, see CG59583
  • no gain/no loss transfers, see CG59584.

The issues arise because an important factor in the valuation of unquoted shares is the size of the shareholding to be valued. SAV will provide a value per share based upon a particular sized shareholding. Therefore when completing the form CG30 you must identify the right size of shareholding. The valuation you need is normally all the shares held or treated as held on 31 March 1982 and included in the 1982 holding. This is not necessarily the number of shares sold.

Although a 1982 holding represents a share pool which was frozen in 1982 it was not created until 1985, see CG51630. Any shares held in 1982 but disposed of between 1982 and 1985 will not be included in the 1982 holding. But the effect of ESC/D34, see CG59582, is that these shares should be included in the shareholding you ask SAV to value. This adjustment is made for valuation purposes only.

Exactly the same principles apply whether you need the valuation for rebasing and indexation purposes or for indexation purposes only. Note that for capital gains tax purposes, where the disposal of shares occurs from 6 April 2008 -

  • any 1982 holding will either be added to an existing S104 holding or create a new one,
  • the value of shares at 31 March 1982 must be used (rather than the original cost of those shares),
  • indexation no longer applies at all, and was previously only available up to 5 April 1998.

Guidance on the share identification rules can be found at CG51500+

Rebasing is given by the operation of TCGA92/S35. Section 35(1) provides `this Section applies to a disposal of an asset which was held on 31st March 1982 by the person making the disposal’. If the relevant conditions are satisfied `it shall be assumed that the asset was on 31st March 1982 sold by the person making the disposal, and immediately reacquired by him, at its market value on that date’, Section 35(2). Almost identical wording is used if the valuation is needed for indexation purposes only. TCGA92/S55 (1) provides `it shall be assumed that on that date [31 March 1982] the asset was sold by the person making the disposal and immediately reacquired by him at its market value on that date’.