CG50605 - Share identification rules: section 104 holding: small capital distributions

It is also possible for a transaction which is not a disposal to reduce the qualifying expenditure available on a Section 104 holding. For example, a taxpayer may make an election under TCGA92/S122 (2) to have a small capital distribution treated as though it was not a disposal. Instead the Capital Gains Tax base cost of the shares is reduced by the amount of the small capital distribution. This is the type of transaction to which TCGA92/S110 (8)(d) applies. Both the pool of qualifying expenditure and the pool of indexed expenditure are reduced by the amount of the small capital distribution. For further details on small capital distributions see CG57835+.