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Marconi losses & CGT

I used to work for GEC and bought some GEC shares under their employee savings related share option scheme.

In June 2003 I finally received £3.96 for Marconi shares. I paid something like £1500 for the GEC shares that were converted into the Marconi shares.

I'm now doing my 2003/04 tax return. I don't have the CGT pages and guidance notes yet.

1) I bought GEC shares as follows a) on 07/07/95 I bought 404 shares at £2.19 (total £884.76) these were bought by exercising a share save option. b) on 28/07/95 I bought 1,707 shares at £1.38 (total £2,355.66) these were also bought by exercising a share save option. c) on 29/03/96 I received 19 shares at £3.29 (total £62.42) as a script dividend. i.e. a total of 2,130 shares for £3,302.84 (average price approx. £1.55)

2) On 25/11/99 I sold 1000 shares. This left me with 1,130 GEC shares. What is the cost for CGT of these shares? Is it 1130/2130 * £3302.84 = £1,752.21 or are the shares I kept assumed to be the first (or last) GEC shares I bought?

3) On 30/11/99 the GEC shares were split into 1130 Marconi shares, some BAE shares and some BAE loan stock. The "Summary Financial statement 2000" document I received says that for CGT the Marconi shares represent 82.7690871% of the value of the GEC shares.

If the above £1,752.21 figure is correct, does this mean the Marconi shares cost for CGT is £1,450.29 ?

4) On 19/5/03 the 1130 original marconi shares were split into 2 new marconi shares and 20 warrants. On 6/6/03 I returned a form I received from Marconi that allowed small shareholders to sell these commission free. These were sold on 10/6/03 for £3.96 (2 shares at 68P, 20 warrants at 13p).

Is any of the above saga required on the CGT form? Or do I just need to put the £3.96 and £1,450.29 figures ?

Reply to
Me
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The only reason for putting this onto a CGT tax return form is to crystallise the loss for offsetting against future gains.

For the shares acquired before the 5th April 1998 you can index the cost by the RPI change between date of purchase and that date. After that date, taper relief applies to future gains, but you made a loss, so it is the indexed cost at 5th April 1998 that is the cost you use.

Regarding your disposal, as I understand it, (as far as I can tell from my old calculations) the First-in, First-out principle applied. The logic behind that was that you eliminated more gain that way. The current situation is much more complicated, but fortunately you can ignore it. You only have to work out the cost of the remaining shares and index them.

Reply to
Terry Harper

ISTR that you cannot use indexation to create or increase a loss.

so it is the actual purchase price that is used

tim

Reply to
tim

Yes, but he made a profit on the shares sold in 1999, so he needs to use indexation to work out the cost of those shares. I understood that after

5/4/98 you worked on the indexed value at that date. That's how it reads to me, anyway.
Reply to
Terry Harper

I've downloaded "Help Sheet IR284 - SHARES AND CAPITAL GAINS TAX" from

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This states ? acquisitions of shares on or after 6 April 1998 are kept as separate acquisitions (but all acquisitions on one day are treated as a single acquisition except for certain 'acquisitions' under Share Option Schemes - see Help Sheet IR287)

? acquisitions of shares between 6 April 1982 and 5 April 1998 are kept in a 'pool', called a Section 104 holding. The cost of the shares in the pool is added together: each share in the pool is treated as if acquired at the same average cost

My understanding is that I should be pooling all my shares (as they were acquired between 6 April 1982 and 5 April 1998) and that the suggestion that I should use First-in, First-out is wrong.

Comments anyone ?

Reply to
Me

That's correct. But had you disposed of any of them before 5/4/98 then you would have done.

Reply to
Terry Harper

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