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HMRC internal manual

Capital Gains Manual

Share valuation: 1982 holding of unquoted shares: shares held on 06/04/65

As well as having a 1982 holding a person may also still own shares of the same class in the company which they held on 6 April 1965. When looking at the value in March 1982 then strictly they should be valued as separate holdings, which could produce an odd result. For example, if a majority holding of 80 per cent of the shares in a company was acquired half in 1964 and half in 1974 then two 40 per cent minority shareholdings would be worth less in total than a single 80% majority holding.

ESC/D34 addresses this oddity by treating all shares of the same class in the same company for which a valuation at 31 March 1982 is required as a single holding for valuation purposes irrespective of when they were acquired.

The ESC also deals with part disposals as follows.

`If the shares or securities in the relevant disposal represent some but not all of those valued at 31 March 1982 then the allowable cost or indexation allowance as appropriate will be based on the proportion that the shares or securities disposed of bears to the total holding at 31 March 1982.’

But this does not mean that the 1982 holding should be aggregated with the shares held on 6 April 1965. If someone has made an election under TCGA92/S35 (5) out of the kink test you may aggregate the 1982 holding and the shares held on 6 April 1965. If there is no election out of the kink test you will need to keep the different holdings separate in order to apply the identification rules. Note that the kink test does not apply for individuals and others chargeable to capital gains tax for disposals on or after 6 April 2008. It is still applicable to companies.