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Posted Mon, 08 Jan 2024 14:18:56 GMT by Edward
Hi, Does receiving stocks (no cash except for very small amounts in lieu of a fractional share) in demergers trigger a reportable capital gains/loss amount (using apportioned cost base vs stock market price on first day of trading of the new shares) irrespective of whether I sell the new shares on the first day of trading or not? I think I should declare any capital gain or loss only once I have actually sold the new shares, with gains or losses calculated using apportioned costs when the demerger took place (assuming there have not been any further capital corporate actions) - please confirm. With regards to cash received in lieu of such fractional share should I just use the amount to reduce the cost basis of the relevant stock(s) to apply only once I have sold the shares? Such cash amounts are small, typically much less than £10. Thank you. Kind regards Edward
Posted Fri, 12 Jan 2024 15:47:23 GMT by HMRC Admin 20
Hi Edward,
Please have a look at the helpsheet HS285, with regard to demergers.  
HS285 Share reorganisations, company takeovers and Capital Gains Tax (2022)
Thank you.
Posted Sat, 13 Jan 2024 17:48:41 GMT by Edward
Thank you. In HS285 section #3 it states that in shares reorganisations for CGT purposes the issues of any share is not treated as an acquisition, therefore, the "acquisition date" for the new shares remains the same as the original date in which I purchased my shares before the reorganisation. But in the case where the reorganisation is a demerger or spin-off and I receive shares in two different companies (one new - the spinoff), for the new spin-off company what is the "acquisition date" ? Is it the original date when I made my initial investment in the old company or is it the day I acquire the spin-off shares? I am currently using the original date as the acquisition date for both. Thank you. Regards, Edward
Posted Wed, 17 Jan 2024 11:40:49 GMT by HMRC Admin 5
Hi Edward

In the case of a demerger, the share acquisition date for the subsidiaries shares, is the date that the demerger occurs.  You will then over shares in the original company and the subsidiary.  
The acquisition date for the shares in the original company remains unchanged.

Thank you
Posted Wed, 17 Jan 2024 15:44:56 GMT by Edward
Hi, thank you for your explanation. Could you kindly clarify the sentence "You will then over shares in the original company and the subsidiary. " please? My apologies if I'm being a bit slow but I don't understand what you mean by "over". Thank you. Regards Edward
Posted Fri, 19 Jan 2024 16:32:39 GMT by HMRC Admin 20
Hi Edward,
This was a typing error - it should read - own shares in the original compay and the subsidiary.
Thank you.

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