Old shares holding

DUTR

In November 2001 I had some BT shares (492) when mm02 were demerged, after reading this

Demerger of mmO2

On 19 November 2001, BT completed the demerger of mmO2, comprising what were BT's wholly-owned mobile assets in Europe: O2 UK (formerly known as BT Cellnet), O2 Communications (Ireland) (formerly known as Esat Digifone), Telfort Mobiel, Viag Interkom, Manx Telecom and Genie.
The confirmed official opening prices for BT Group and O2 (mmO2) shares for capital gains tax ('CGT') purposes, were 285.75 pence and 82.75 pence respectively. This means that, of the total value of 368.50 pence, 77.544% is attributable to BT Group and 22.456% to O2 (mmO2).

Accordingly, for CGT calculations, the base cost of your BT Group shares is calculated by multiplying the acquisition cost of your BT shareholding by 77.544%, and the base cost of your O2 (mmO2) shares is calculated by multiplying the acquisition cost of your BT shareholding by 22.456%.


Am I right in thinking that those 492 shares in my holding are assumed a purchase price of £2.8575 each or an aquisition cost of £1405.89
Or is that too simplistic?

Lakeuk

DUTR wrote: »

for CGT calculations, the base cost of your BT Group shares is calculated by multiplying the acquisition cost of your BT shareholding by 77.544%, and the base cost of your O2 (mmO2) shares is calculated by multiplying the acquisition cost of your BT shareholding by 22.456%.

For example if you bought at £5 a share it would be

(£5 * 77.544%) * 492 shares = £1907.58

DUTR

Lakeuk wrote: »

For example if you bought at £5 a share it would be

(£5 * 77.544%) * 492 shares = £1907.58

Thanks for replying, I was starting to think my post was invisible, in a sense I don't know what I bought those shares for, I know I have them as they are showing in my pool, but only as far back as 1998 can I account for, however due to the the demerger the £2.85 price does that not come into play? eg after the demerger whatever shares you have at that point are now assumed purchased at £2.85 each

bowlhead99

DUTR wrote: »

Accordingly, for CGT calculations, the base cost of your BT Group shares is calculated by multiplying the acquisition cost of your BT shareholding by 77.544%, and the base cost of your O2 (mmO2) shares is calculated by multiplying the acquisition cost of your BT shareholding by 22.456%.

Am I right in thinking that those 492 shares in my holding are assumed a purchase price of £2.8575 each or an aquisition cost of £1405.89
Or is that too simplistic?

Yes, far too simplistic. Read the paragraph above again, which tells you how to calculate the base cost of what you hold, by allocating your original acquisition cost of the 'old' shares proportionally between the two businesses.

You bought a share in the business. They split the business into two bits. At the time they did this, the BT shares represented 77.5% of the total value of the combined shares. So it stands to reason that the cost to you of your BT shares is deemed to be 77.5% of whatever you paid for the old shares.

It would be somewhat ridiculous if just because the BT shares happened to be worth 285.75p on that specific day in 2001, that was deemed to be your cost regardless of what you actually paid. If you paid a tenner for the shares you'd be somewhat annoyed if you were now selling them for 3.50 and had to pay tax despite your huge losses because they arbitrarily deemed you'd only paid 2.86 for them.

Similarly if you only bought the shares for £1 each for a £492 total cost, you shouldn't be allowed to dodge tax by claiming you had somehow spent £1907 as you suggest.

Long story short, Lakeuk is right.