ACCA ATX ^UK Syllabus A2. Chargeable gains - Gift of quoted shares - Notes ^{1 / 3}

You will have to pay Capital gains tax on it

Step by step approach:

1. Step 1
   Value the shares using:

   (Lower quoted price + Higher quoted price)/2

   Note: the share valuation rules are different for IHT so be careful not to confuse them.

2. Step 2
   Calculate Disposal proceeds 
   = Number of shares given * value per share (step 1)

Illustration:

Megha gifted 1,000 shares in N plc when they were quoted at 400-408 pence per share, with marked bargains on that day of 398p, 402p, and 407p.

• Calculate the value to be used for capital gains disposal proceeds.

Solution:

1. Step 1 - Value the shares
   (400+408)/2 = 404

   Note: the marked bargains are not relevant for CGT life gifts but they would be relevant for IHT

2. Step 2 - Calculate Disposal proceeds

   = Number of shares given * value per share (step 1)
   = 1,000 shares *£4.04 = £4,040