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HMRC internal manual

Capital Gains Manual

From
HM Revenue & Customs
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Roll-over relief on transfer of shares to Share Incentive Plan: allowing full relief

If the replacement asset is acquired for the full amount of the disposal consideration,then:

  • you reduce the consideration for the disposal to a figure that gives a no gain/no loss result

then

  • you reduce the acquisition cost of the replacement asset by the same amount.

The whole of the capital gain is rolled over into the acquisition cost of thereplacement asset.

EXAMPLE

Mr A acquired shares in AA Ltd for £5,000 before April 1998.

In July 2001, he sells them to the trustees of the AA Ltd approved Share Incentive Planfor their market value £15,000 making a gain after indexation allowance of £9,000. InAugust 2001, he acquires shares in XYZ Ltd for £17,500 and claims relief underTCGA92/SCH7C.

The computations are:

    £
     
(a) No gain/no loss on disposal on AA Ltd shares  
  Actual consideration 15,000
  No gain/no loss consideration 6,000
  Reduction 9,000
(b) Reduced costs of XYZ Ltd shares:  
    £
  Actual cost 17,500
  Reduction 9,000
  Cost to carry forward 8,500