IHTM34103 - FACET procedures: bonus issues

A bonus issue is the issue of “free” shares by the company to its shareholders.

If there is a bonus issue you need to compare the holding at the date of death with the holding at the date of sale. Example 1 at ( IHTM34185) shows you how to do this when there is a straightforward bonus issue.

A bonus issue can be of a different class of shares to those originally held. For example, a company may declare 1 preference share for every 5 ordinary shares held. If the deceased owned 1,500 ordinary shares then the new holding would be 1,500 ordinary shares and 300 preference shares. The date of death value would have to be apportioned between the two new holdings, using the adjustment factors in Extel.

Example 2 at ( IHTM34185) tells you how to calculate the loss where the bonus issue is of a different class of share.

If the bonus issue was renounced you should refer the matter back to the caseworker to deal with – referring them to the instructions on renounced bonus issues ( IHTM34186). But where the issue is renounced for cash you should first check the details in Extel and confirm whether the cash represents the same value as the bonus issue on the form 516.