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Halifax Group plc - base cost of shares

Do the free shares acquired on demutualisation have any base cost?

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Halifax Building Society demutualised in June 1997 to become Halifax Group plc.  CG56820 suggests that the free shares may have nil base cost but Lloyds Banking Group website states that "For Capital Gains Tax purposes the original price for Halifax Group plc shares is 734.5 pence on 2 June 1997" suggesting that the shares did have a base cost.  Has anyone looked into this for a client and determined the answer?

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By Paul Crowley
18th Dec 2020 17:05

What did client pay?

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Replying to Paul Crowley:
RLI
By lionofludesch
18th Dec 2020 17:22

Was there a disposal on 2nd June 1997 ?

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By TaxAngel
18th Dec 2020 17:35

Nothing - they were free shares when the Building Society converted to a company

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By TaxAngel
18th Dec 2020 17:35

Nothing - they were free shares when the Building Society converted to a company

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paddle steamer
By DJKL
18th Dec 2020 17:27

Can you add a web link so that we can read precisely what they say on their website and where?

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Ivor Windybottom
By Ivor Windybottom
18th Dec 2020 17:35

I think it is zero.
The info on the website was probably published to allow other calculations to be performed, where the value of shares received mattered (e.g. part disposals, etc.).

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RLI
By lionofludesch
18th Dec 2020 17:55

I vote 734.5 p apiece.

They sold their rights in the predecessor mutual society.

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By paul.benny
18th Dec 2020 19:59

Agree
The June 1997 date refers to the date of demutualisation and stock market listing.

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By Truthsayer
19th Dec 2020 09:35

There is a value to what they gave up on demutualisation. That value was swapped for these shares, so these shares have a base cost. However, I think the base cost is whatever the balance of the account in the building society was at the time. See https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg13028

EDIT: No, I think on reading the above again the shares have a £Nil cost. This seems to be confirmed here; https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg56820

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By TaxAngel
19th Dec 2020 09:50

Thanks, I agree with your edit. The exchange from share account to deposit account was a chargeable event in 1997 but as the balance in share account equalled amount in new deposit account there was no gain at that point. This issue is separate from the acquisition of the new shares. The acquisition of the shares did not involve additional consideration being paid by client so as no additional consideration so base cost of shares is nil.

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By richard thomas
18th Dec 2020 20:02

Have a look at s 217 TCGA 1992.

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