Tx notes fa22 Final

 
Example 2
 
 
Graham had the following transactions in Alderholt Ltd shares:
February 2018 
Purchased 7,000 shares for £15,000
June 2018
Purchased 1,000 shares for £4,000
July 2018
Bonus issue of one for five
October 2022
Sold 5,000 shares for £20,000
Calculate the capital gain arising on the disposal in October 2022. 
3. Rights issue 
Existing shareholders have the right to purchase new shares in proportion to their existing 
shareholding at a price which is usually below market value.
The share pool is increased by the number and cost of the shares acquired via the rights issue.
 
Example 3
 
 
Mark is an employee of Bromley Ltd. He had the following transactions in the company shares:
February 2018
Purchased 6,000 shares for £15,000
June 2018
Purchased 900 shares for £2,700
July 2018
Took up 1 for 3 rights issue for £3.00 per share 
September 2022
Sold 6,000 shares for £24,000
Calculate the capital gain on the disposal in September 2022. 

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4. Takeovers 
(a)
Where a takeover is a share for share exchange, also known as a paper for paper transaction, 
the shareholders of the company taken over receive shares in the acquiring company. This 
normally does not constitute a disposal for CGT purposes as no cash is received and the 
taxpayer simply acquires shares in the takeover company on a proportionate basis to the 
shares held in the existing company.
(b)
The new shares are deemed to have been acquired at the same cost as the original shares. 
(c)