In this example there is a part disposal of shares.
FACTS
The shares fall to be dealt with in a TCGA92/S104 holding. The computations are as follows:
| Number of shares held | Actual cost | Indexed cost | |||||||
| December 1994 subscription |
| 2,000 |
|
| £5,000 |
|
| £5,000 |
|
| Indexation December 1994 to August 1995 |
|
|
|
|
|
|
| £135 |
|
|
|
| 2,000 |
|
| £5,000 |
|
| £5,135 |
|
| August 1995 purchase |
| 1,000 |
|
| £15,000 |
|
| £15,000 |
|
|
|
| 3,000 |
|
| £20,000 |
|
| £20,135 |
|
| Indexation August 1995 to April 1998 * |
|
|
|
|
|
|
| £1,711 |
|
| (* indexation to April 1998 only, CG17207) |
| 3,000 |
|
| £20,000 |
|
| £21,846 |
|
| January 2002 part disposal |
| (1,600) |
|
| (£10,667) |
|
| (£11,651) |
|
|
|
| 1,400 |
|
| £9,333 |
|
| £10,195 |
|
To find the VC loss relief potentially due go through the fours
steps described in
VCM47150.
Step 1
Compute the allowable loss in the usual way. The disposal of
1,600 shares in January 2002 results in an allowable loss, as
follows:
| Disposal proceeds |
|
| £4,000 |
| less indexed cost | £11,651 |
|
|
| or actual cost | £10,667 | [#] | (£10,667) |
| Allowable loss |
|
| (£6,667) |
[#] For disposals on or after 30 November 1993 indexation
allowance cannot create or enhance an allowable loss.
Step 2
Identify the qualifying and the non-qualifying shares
disposed of. As there are no relief shares (see
VCM47050) the normal rules of
ICTA88/S576 (1) apply and disposals are identified on a last in
first out basis. The part disposal of 1,600 shares is
identified:
Step 3
Calculate the part of the allowable loss which arises on the
qualifying shares.
| £6,667 x | 600 | = £2,500 |
|
| 1,600 |
|
Step 4
Compare the figure in Step 3 of £2,500 with the actual
cost of the qualifying shares, which was £2.50 per share or
£1,500 for the 600 qualifying shares sold. VC loss relief may
be claimed on the lower figure of £1,500. The balance of the
loss is £6,667 less £1,500 = £5,167 and is available
as a capital loss.
