The share identification rules
Regardless of when they were originally acquired, all shares of the same class, in the same company are treated as forming a single asset. However, ‘same day’ transactions are matched and the ’30 day’ anti-avoidance rules will remain.
Example
On 10 April 2015 Tina sold 2,000 shares in A plc from her holding of 5,000 shares which he had acquired as follows:
- 1,000 in February 1991
- 1,500 in May 2002
- 2,500 in September 2006
Due to a significant stock market change, she decided to purchase 500 shares on 30 April 2015 in the same company.
The disposal of 2,000 shares will be matched firstly with the later transaction of 500 shares. As this is within the following 30 days and then with 1,500/5,000 (1,000+1,500+2,500) of the single asset pool on an average cost basis.
The CGT annual exemption
Every tax year each individual is allowed to make gains up to the annual exemption without paying any CGT. The annual exemption for 2015/16 and 2016/17 is £11,100. You may have to take action to ensure that both spouses/civil partners and possibly children utilise this free allowance.
The new CGT rates
The 28% and 18% rates will continue to apply for carried interest and for chargeable gains on residential property that do not qualify for private residence relief (PRR). In addition, the 28% rate still applies for ATED related chargeable gains accruing to any person (principally companies).
