The Capital Gains Tax (Parallel Pooling) Regulations 1986

SCHEDULE INTRODUCTORY

In this Schedule—

• Part I is a statement of facts which are to be assumed;

• Part II is an application of the Regulations to qualifying securities which are not relevant securities;

• Part III is an application of the Regulations to qualifying securities which are relevant securities.

PART I

1 QUALIFYING SECURITIES AND EXPENDITURE

PG plc held, acquired or disposed of qualifying securities as follows:—

Date		Number of securities	Expenditure/proceeds
31st March 1982	holding	1,000	6,000
1st September 1982	purchased	2,000	12,000
1st March 1983	purchased	3,000	10,000
1st September 1983	rights	6,000	12,000
1st January 1985	sold	3,000	12,000
31st January 1985	purchased	3,000	10,000

2 RETAIL PRICES INDEX

The Retail Prices Index is assumed to be:—

March 1982	100	September 1984	112
September 1983	107	January 1985	114
March 1984	110	March 1985	116

3 CALCULATION OF INDEXED POOL OF EXPENDITURE IN ACCORDANCE WITH SCHEDULE 6

Expenditure
	Securities	Excluded from pools	Unindexed pool	Indexed pool
		£	£	£
31st March 1982	1,000		6,000	6,000
1st September 1983 indexed rise:
No math image to display				420
Additions to 1983 holding	2,000		12,000	12,000
	(Acquired 1st September 1982)
Rights taken up	3,000	6,000
	6,000	6,000	18,000	18,420
1st March 1984 indexed rise:
No math image to display				516
Addition (including rights) to 1983 holding	6,000	6,000	10,000	10,000
	12,000	12,000	28,000	28,936
1st September 1984 indexed rise:
No math image to display				521
Expiry of 12 months following rights issue; expenditure no longer excluded	(12,000)	12,000	12,000
	12,000	—	40,000	41,457
1st January 1985 indexed rise:
No math image to display				746
	12,000		40,000	42,203
Disposal	3,000		10,000	10,551
	9,000		30,000	31,652

4 SECURITIES HELD LESS THAN ONE YEAR AT 31ST MARCH 1985

The 3,000 securities acquired on 31st January 1985 for £10,000 do not qualify for inclusion in the 1983 holding on 31 March 1985.

PART II QUALIFYING SECURITIES WHICH ARE NOT RELEVANT SECURITIES

STEP 1—Regulation 5(a)–(c)
Index the indexed pool as if an operative event had occurred immediately before 1st April 1985
Indexed pool (see Part I.3, above)	£31,652
No math image to display	570
	£32,222
Therefore— A = 9,000 B = 30,000 C = 32,222.
STEP 2—Regulation 5(d) and (e)
Number of securities not within 1983 holding (see Part I.4, above)	3,000
Relevant allowable expenditure	£10,000
Therefore— D = 9,000 + 3,000 = 12,000 E = 30,000 + 10,000 = 40,000.
STEP 3—Regulation 5(f)
F = 10,000.
STEP 4—Regulation 5(g) and (h)
Number of securities held on 31st March 1982	1,000
Rights issue 1 for 1	1,000
	G = 2,000
Relevant allowable expenditure on securities	= £6,000
Relevant allowable expenditure on rights 1,000 @ £2 per share	= £2,000
	H = £8,000.
STEP 5—Regulation 6
No math image to display	= 1,600
No math image to display	= £6,400
Therefore the 1982 holding comprises:
1,600 shares—relevant allowable expenditure £6,400.
Note: applying the above fraction to the separate components of H (step 4) £4,800 will qualify for indexation from March 1982 and £1,600 from September 1983 for the purposes of section 87 of, and paragraph 5 of Schedule 13 to, the Finance Act 1982.
STEP 6—Regulation 7
Number of securities in the 1983 holding forming part of new holding = 9,000 − 1,600	= 7,400
Relevant allowable expenditure on these securities = £30,000 − £6,400	= £23,600
Aggregate of relevant allowable expenditure and indexation allowance for the purposes of paragraph 13(2), Schedule 19
No math image to display	= £26,528.
STEP 7—Regulation 8
Number of securities in new holding = 12,000 − 1,600	= 10,400
Qualifying expenditure = £40,000 − £6,400	= £33,600
Relevant allowable expenditure in relation to securities not included in 1983 holding	= £10,000
Indexation allowance	= £180
Indexed pool in relation to the new holding
= £26,528 + £10,000 + £180	= £36,708.

SUMMARY

1982 holding: 1600 securities—relevant allowable expenditure £6,400 (of which £4,800 qualifies for indexation from March 1982 and £1,600 from September 1983).

New holding: 10,400 securities—qualifying expenditure £33,600 and indexed pool of expenditure £36,708.

PART III QUALIFYING SECURITIES WHICH ARE RELEVANT SECURITIES

STEPS 1–5 as in Part II above.
STEP 6—Regulation 9
Number of relevant securities in 1983 holding not forming part of 1982 holding = 9,000 − 1,600	= 7,400
Relevant allowable expenditure
No math image to display	= £25,348
Expenditure apportioned to securities
No math image to display	= £3.4254
Deemed date of acquisition of those securities—31st March 1984.

SUMMARY

1982 holding: 1,600 securities—relevant allowable expenditure £6,400 (of which £4,800 qualifies for indexation from March 1982 and £1,600 from September 1983).

Other relevant securities: 7,400 securities treated as acquired on 31st March 1984—relevant allowable expenditure £25,348.

3,000 securities treated as acquired on 31st January 1986—relevant allowable expenditure £10,000.