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HMRC internal manual

Shares and Assets Valuation Manual

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HM Revenue & Customs
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Capital Gains Tax Procedures: 1982 Holding and Extra Statutory Concession D44

If a taxpayer transfer shares out of a March 1982 shareholding to a spouse or civil partner Extra Statutory Concession D44 (ESC/D44) allows a taxpayer to elect to have the value per share of all the shares held and treated as held on 31 March 1982 computed by reference to the size of the largest shareholding actually held on 31 March 1982 out of which any of the shares sold were transferred

Example

At 31 March 1982 a person owns 80 out of 100 issued shares in an unquoted company. In 2006 the person transfers 20 shares to their spouse or civil partner who had not previously owned any shares in the company. The spouse or civil partner sells these 20 shares.
If the spouse or civil partner makes a claim to take advantage of the ESC the Inspector should ask SAV for a value per share at 31 March 1982 based upon a holding of 80 shares. If SAV agrees a value per share of £2,000 based upon an 80 per cent shareholding, the 31 March 1982 value of the spouse’s or civil partner’s shareholding would be 20 x £2,000 = £40,000.

The ESC works in exactly the same way for shares transferred from a member of the same group of companies.

Example

At 31 March 1982 A Ltd owns 80 out of 100 shares in X Ltd. Its two subsidiaries, B Ltd and C Ltd, own none. A Ltd transfers 40 shares each to B Ltd and C Ltd. B Ltd and C Ltd immediately sell the X Ltd shares.
On a statutory basis the value per share would be based on a 40 per cent shareholding for B Ltd and C Ltd. If B Ltd and C Ltd claim to take advantage of the ESC the Inspector should ask SAV for a value per share based upon a holding of 80 shares.

If the taxpayer or agents claim the benefit of ESC D44 in a letter to SAV, or if you consider that the taxpayer would benefit from a higher value at 31 March 1982 by making a claim under ESC D44, you should take the matter up with the Inspector who will consider whether the time limit for claiming the concession has expired.

  Additional Guidance: SVM150000