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HMRC internal manual

Venture Capital Schemes Manual

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HM Revenue & Customs
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Share Loss Relief: individual and corporate claimants: individual claimants: more complex cases: disposal of shares forming part of a mixed holding: where an election has been made under TCGA92/S105

The share identification rules in TCGA92S105(1)(a) provide for shares of the same class in the same company acquired on the same day to be treated as acquired in a single transaction. Because the TCGA does not distinguish between shares which are qualifying shares for Share Loss Relief purposes and other shares, the Share Loss Relief statute contains provisions which allow you to distinguish amongst shares acquired on the same day where it is necessary to do so (see VCM75460).

But in a limited range of circumstances an individual shareholder may elect under TCGA92/S105A for the single transaction deeming in section 105 to apply separately to ‘approved-scheme shares’ and to other shares acquired on the same day. (Very roughly, ‘approved-scheme shares’ are certain shares acquired under enterprise management incentives or approved share options schemes: for detailed guidance see CG56460+). Where an election has been made the additional identification rules applicable for Share Loss Relief purposes are modified to accommodate the two deemed acquisitions on the same day.

The additional identification rules normally applicable for Share Loss Relief purposes are at ICTA88/S299 (applied by ITA07/S148(6)(b) in relation to shares issued between 1 January 1994 and 5 April 2007) and ITA07/S246 (applied by section 148(6)(c) in relation to shares issued on or after 6 April 2007): see VCM75460.

The modified identification rules applicable for Share Loss Relief purposes are exactly the same as those applicable for capital gains tax purposes in the same circumstances: this is the effect of ITA07/S149(1). The rules are still based on ICTA88/S299 or ITA07/S246, but are modified by TCGA92/S105A(4) for capital gains tax purposes. The broad effect of these rules is that the other shares are treated as disposed of before the approved-scheme shares.