»Ê¹ÚÌåÓýapp

• April 2008 Mr Brown buys 10,000 shares in Trentham Traders Ltd, cost £12,000.
• January 2011 Trentham Traders Ltd is taken over by Vale Ventures PLC a quoted company. For every 50 shares held Mr Brown receives one unit of Vale Ventures PLC loan stock, nominal value £100, with detachable warrants to subscribe for 10 Vale Ventures PLC shares at a price of 220p per share at any time before 31 December 2015.
• April 2012 Mr Brown sells his share warrants for £950.

Capital Gains Tax computation

»Ê¹ÚÌåÓýapp Vale Ventures PLC loan stock is a relevant security as defined in TCGA92/S108, see CG51650+. It is not a qualifying corporate bond, see CG53700, because the warrant gives the right to acquire further shares. »Ê¹ÚÌåÓýapp loan stock is treated as acquired at an amount equal to the cost of the Trentham Traders Ltd shares; £12,000 see CG52020.

»Ê¹ÚÌåÓýapp market value* of one unit of loan stock and one warrant on the first day of dealing is

• Loan stock = £96.25
• Warrants = 0.18p

* This is the 1/4 up value as defined in TCGA92/S272 (3), see CG59510.

»Ê¹ÚÌåÓýapprefore, the total market value is

-	-	Calculation	-	Amount
Loan stock	=	£96.25 x 200	=	£19,250
Warrants	=	18p x 2,000	=	£360

»Ê¹ÚÌåÓýapprefore, the acquisition cost of the loan stock is

(£12,000 x £19,250) / (£19,250 + £360) = £11,780

and the warrants

(£12,000 x £360) / (£360 + £19,250) = £220

»Ê¹ÚÌåÓýapp gain on the disposal of the warrants in April 2012 is

-	£
Disposal proceeds	950
Less Cost	220
Chargeable Gain	730