CH19 - Shares and Securities for Individuals - CGT

Question 1

QuestionExempt securities from CGT

Answer 1

Gilt-edged securities (treasuries)
Qualifying corporate bonds (Company loan notes/commercial loans)
ISA

Question 2

Valuation of Quoted shares

Answer 2

For CGT purposes= AVG between the daily stock exchange

Question 3

Identification of shares sold - how to match

Answer 3

1. Shares acquired on the same day
2. Shares acquired within 30 days
3. From the share pool (oldest first)

Question 4

Pricing shares sold Shares acquired next 30 days

Answer 4

Sale proceeds = (shares sold amount/total shares sold)*Disposal proceeds
Less: acquisition cost
=== Chargeable gain/loss

Question 5

Pricing shares sold Shares acquired from share pool

Answer 5

Sale proceeds = (shares sold from pool/total shares sold)*Disposal proceeds
Less: Acquisition cost (W)
=== Chargeable gain/loss

Question 6

Acquisition cost from share pool (W)

Answer 6

Total of shares from share pool and total £ value
MINUS: Disposal, amount, value is derived as an average = acquisition cost
==== Balance C/F

Question 7

Bonus issue and Rights issue

Answer 7

Treated as part of the bonus pool

Question 8

Takeover and reorganisation

Answer 8

Reorganisation is simply proceeds less cost. The shares just change name

Takeover:
Calculate the preference and ordinary share value to get total MV
Apportion these out using the original purchase value as a cost.
These gives you allocated acquisition cost.

Question 9

Cash proceeds as part of consideration in cash and shares

Answer 9

Cash Received/(cash received+MV of new shares)*Cost of original shares
Work out MV based on question date. The cost is just apportioned as part of the original cost