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Sale of shares purchased at different times

Sale of shares purchased at different times

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Hi All,

Scenario:

Mr A holds 70% of shares in a  trading company, of which he is a Director. He is looking to sell these shares asap.

These shares were purchased in two tranches, one tranch (40%) being over a year ago and the other (30%) three months ago.

I understand that these shares form a pool, for costing purposes. How would it work with regard to Entrepeneurs relief as the earlier tranch qualifies and the latter doesn't.

Would he apportion his gain based on 40% being at 10% then 30% being at 18%/28%?

What are the matching rules, for instance if he were to sell 40% would it be on a FIFO basis, so all of this gain would qualify for ER?

Many thanks

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By BKD
21st Sep 2012 19:09

Why ...

... do you think the latter tranche of shares won't qualify for ER?

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By Jigs
21st Sep 2012 19:24

because they havent been held for twelve months? Although thinking about it, I think you've answered my question.. he has held over 5% of shares for longer than 12 months, so all shares will qualify. Doh!

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By BKD
21st Sep 2012 20:14

Apologies ...

... for teasing you. I suspected that was your thinking, but I find that if you work things out for yourself, it's more likely to stick in the mind for next time :)

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