VCM52060 - VCT: investor CG 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 alsoCG50500 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:
(1) 60,000 shares acquired June 1997 Exempt
(2) 40,000 shares acquired September 1997 Exempt
(3) 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.
(4) 100,000 shares acquired May 1998 Exempt
(5) 50,000 shares acquired May 1998 Not exempt