1. F6 Taxation (UK)

2. Section A: The UK tax system Section B: Income tax liabilities Section C: Chargeable gains Section D: Corporation tax liabilities Section E: Inheritance tax Section F: National insurance contributions Section G: Value Added Tax Section H: The obligations of tax payers and/or their agents Taxation (UK)

3. Designed to give you the knowledge and application of: Section C: Chargeable gains C1. The scope of the taxation of capital gains C2. The basic principles of computing gains and losses C5. Gains and losses on the disposal of shares and securities C6. The use of exemptions and relief in deferring and minimising tax liabilities arising on the disposal of capital assets

4.  Calculate the value of quoted shares where they are disposed of by way of a gift. [2]  Explain and apply the identification rules as they apply to individuals and to companies, including the same day, nine day, and thirty day matching rules. [2]  Explain the pooling provisions. [2]  Explain the treatment of bonus issues, rights issues, takeovers and reorganisations. [2] Learning Outcomes 4 C5: Gains and losses on the disposal of shares and securities

5. Calculate the value of quoted shares where they are disposed of by way of a gift shares listed on a recognised stock exchange Quoted shares  Gift of an asset (quoted shares) is a chargeable disposal, market value is used when shares are disposed of by way of a gift Market value of the shares & securities is valued at a lower of (Quarter up rule) Lower of quoted price + ¼ x (Higher quoted price – Lower quoted price) Average of the highest & lowest recorded bargains Refer to Example on page 285

6. Explain and apply the identification rules as they apply to individuals and companies, including the same day, nine day, and thirty day matching rules and pooling provisions Disposals of shares are matched with purchases in the following order:  shares purchased on the same day as the disposal  shares purchased during the nine days prior to the disposal  shares in the 1985 pool  acquired on or after 1 April 1982  the 1982 holding – share acquired between 1 April 1965 and 31 March 1982  other shares on a ‘last in first out’ basis (broadly any shares held pre 31 March 1965 ) Share matching rules (Company) Continued…

7. Disposal of shares from 6 April 2008 onwards are matched with purchases in the following order:  Shares purchased on the same day as the disposal  Shares purchased within the following 30 days  Shares in the share pool Share matching rules (Individual) Refer to Example (Barber) on page 284 Continued……

8. is a free issue of shares to existing shareholders in proportion to their existing holding Bonus issues Explain the treatment of bonus & rights issues, takeovers & reorganisations When it is received, there is no additional cost, this is not an operative event. The 1985 pool is not indexed up before adding the bonus issue to the pool. Individuals Companies The bonus shares are treated as having been acquired on the same date as the holding that qualified for the bonus. Continued…

9. a rights issue is an offer to existing shareholders to buy additional shares in proportion to their existing holdings Rights issues The purchase of rights issue shares is an ‘operative event.’ The 1985 pool must be indexed up to the date of the rights issue, before the shares are added to the pool. Individuals Companies Rights shares are treated as having been acquired on the same date as the holding that qualified for the rights. Continued… Continued……

10.  Known as ‘paper for paper’ transaction, this does not give rise to chargeable gain.  New shares take the place of the old shares, and are treated as having been purchased at the same time and for the same cost.  There is no gain at the time of the takeover; there is a gain when the new shares are disposed of.  If more than one class of the new share is acquired (e.g. ordinary shares and preference shares), the cost of the original shares must be allocated according to the market value of the new shares at the time of the takeover. When one company takes over another company, the new company acquires shares in the old company in exchange for shares in the new company Takeovers & reorganisations - Company Refer to Example (Saturn Ltd) on page 286 Continued…

11. 11 RECAP  Calculate the value of quoted shares where they are disposed of by way of a gift. [2]  Explain and apply the identification rules as they apply to individuals and to companies, including the same day, nine day, and thirty day matching rules. [2]  Explain the pooling provisions. [2]  Explain the treatment of bonus issues, rights issues, takeovers and reorganisations. [2]