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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 partial relief

If the replacement asset is acquired for less than the full amount of the disposal consideration, then partial relief may be available.

If the amount which is not used is less than the amount of the original gain, then:

  • you reduce the amount of the gain to the amount not used

then

  • you reduce the acquisition cost of the replacement asset by the reduction in the gain.

Part of the capital gain is rolled over into the acquisition cost of the replacement asset and part remains chargeable.

There is no relief if the amount which is not used is greater than the amount of the original gain.

EXAMPLE

The facts are the same as in CG61980 except that this time, Mr A acquires the XYZ Ltd shares for £10,000.

The computations now become:

(a) Reduction in gain on disposal of AA Ltd shares:    
       
      £
  Actual gain   9,000
  Amount not used (15000-10000)   5,000
  Reduction in gain   4,000
(b) Reduced cost of XYZ Ltd    
      £
  Actual cost   10,000
  Reduction in gain   4,000
  Cost to carry forward   6,000
  Capital gain arising 2001-02 before taper relief   5,000

(Taper relief does not apply to disposals from 06 April 2008.)