VCM66650 - VCT: disposal relief: share pooling: example
This example illustrates how the rules work if a taxpayer owns
shares some of which are exempt from CGT and some of which are held
in a non-exempt TCGA92/S104 holding, see CG50500 onwards.
A taxpayer makes the following acquisitions of ordinary
shares.
- May 1996 buys 15,000 shares in A plc cost £20,000. A plc is not a VCT.
- June 1997 buys 60,000 shares in A plc cost £60,000. A plc was approved as a VCT with effect from 6 April 1997.
- September 1997 buys 50,000 shares in A plc cost £50,000.
- May 1998 buys 150,000 shares in A plc cost £150,000.
£10,000 worth of the A plc shares bought in September 1997
are acquired in excess of the permitted maximum for 1997-98 and are
not exempt from CGT. These shares will be included with the
taxpayer's existing Section 104 holding of 15,000 shares acquired
in May 1996 before A plc was approved as a VCT. The pooling rules
do not apply to the purchase in June 1997 and £40,000 worth of
the shares acquired in September 1997.
For CGT purposes the taxpayer has five separate blocks of A
plc shares:
| 60,000 shares acquired June 1997 | Exempt |
| 40,000 shares acquired September 1997 | Exempt |
| A Section 104 holding of 25,000 shares | Not exempt |
Section 104 Holding
|
| Number of Shares |
| Pool of Qualifying Expenditure |
| Pool of Indexed Expenditure |
| May 1996 | 15,000 |
| £20,000 |
| £20,000 |
| Indexation May 1996-Sept 1997 |
|
|
|
| £1,840 |
|
| 15,000 |
| £20,000 |
| £20,840 |
| September 1997 | 10,000 |
| £10,000 |
| £10,000 |
|
| 25,000 |
| £30,000 |
| £30,840 |
Indexation allowance has been frozen at April 1998, see CG17207.
| 100,000 shares acquired May 1998 | Exempt |
| 50,000 shares acquired May 1998 | not exempt |
