Indexation Allowance calculation for CGT

[NickMoore]

Let's say a UK Limited company has some spare cash and invests it in holdings of a single asset (e.g. a unit trust) over a period of a number of years. Later, it sells part of the holding making a chargeable gain.

How to identify which shares were sold so as to calculate the gain and the indexation allowance? I.e. what time basis to use for the calculation. Can't find an answer anywhere.

 

[UK Contractor Accountant]

TCGA92/S99 treats units in a unit trust as though they were shares in a company. The normal Capital Gains Tax rules which apply to shares apply to units in a unit trust.

From 6 April 2008 all shares of the same class, in the same company, are
together called a ‘Section 104 holding’. You add together the costs of the
shares in this holding: each share in the holding is treated as if acquired at
the same average cost. There are a couple of circumstances in which shares will not be regarded as becoming part of the holding. Mainly shares affected by the ‘bed and breakfasting’ and ‘same day’ rules (see below)


How to identify the shares disposed of
When you dispose of shares you cannot work out your capital gain or loss
until you have matched the shares disposed of with shares you acquired.
You are treated as disposing of shares in the following order:
First -shares acquired on the same day as the disposal (the ‘same day’ rule).

Second - shares acquired in the 30 days following the day of disposal
(the ‘bed and breakfasting’ rule)


Third- shares in the Section 104 holding.