From Timetotrade
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A Share Reorganisation is a general term used to describe a range of share transactions that include:
The most common transactions are Bonus Issues, Rights Issues and Share Splits. Both Bonus and Rights Issues involve new shares being allotted to some or all of the existing shareholders in proportion to their share holdings. In a rights issue the allotment is provisional until the shareholder accepts that they will pay for the shares. An example of a share split in the UK is when one 100 pence ordinary share may be split into five 20 pence ordinary shares.
From a taxation perspective basic Capital Gains Tax rules apply to UK share reorganisations, mainly:
- the issue of any new shares is not treated as an acquisition
- the loss of alteration of any old shares is not treated as a disposal
Please note that when dealing with UK share reorganisations, any shares purchased on or before 5th of April 1998 and sold prior to 5th April 2008 are subject to indexation allowance (relief).
timetotrade's Capital Gains Tax Calculator includes a Share Reorganisation tool to ensure transactions are correctly accounted for and appropriate CGT applied.
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