ATXP6 UK
Syllabus A2. Chargeable gains A2a. Gains and losses on the disposal of shares and securities

A2a. Gift of quoted shares

Syllabus A2a)

C4 Gains and losses on the disposal of shares and securities

If you give away shares as a gift

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
    Calculated 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 - Calculated Disposal proceeds

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