doug2500 wrote:I'm a bit disappointed that Aptitude have not issued or published any tax advice at all about their recent B share issue and consolidation.
It has taken me only a few minutes to locate Aptitude's link to their
shareholder circular about this corporate action on their website and find four pages of information about UK taxation on its pages 28-31.
doug2500 wrote:Info that might be helpful would include:
The values of the B shares and new ordinary shares on the first day of trading
The apportionment of base cost between them
The share values were of course not possible when the shareholder circular was published, as the first day of trading hadn't yet happened. And in practice, when I've seen companies publish first-day-of-trading figures about a corporate actions in the past, there has often quite a long delay after the corporate action before they did so - typically in the weeks-to-months range. I don't actually know the reason for that, but my guess is that companies want to avoid publishing incorrect figures, so get their figures checked by HMRC before publishing them - and HMRC are not renowned for their rapid response times!
Anyway, the shareholder circular says that the apportionment is done according to "
their respective values on the first day on which the New Ordinary Shares are listed" and according to
https://www.investegate.co.uk/aptitude- ... 00023483N/, "
With effect from 8.00 a.m. today, 24 September 2019, the New Ordinary Shares will be admitted to the premium listing segment of the Official List of the FCA and to trading on the main market of the LSE." So the relevant date would seem to be September 24th. The only plausible value for the B shares on that date (or any other date that they existed) is 73p, and the closing price for the ordinary shares on that date was 600p. (I'm not quite certain that the closing price is the pedantically correct value to use for shares for CGT purposes, as I've seen conflicting information about exactly what price should be used, but it should certainly be close and I think it's accepted.)
Assuming those prices are correct, your revised calculation that the base cost should be split in the proportions (7*600) : (8*73) or 4200 : 584 is correct -
provided your previous number of shares was divisible by 8. If it's not, you should split it in the proportions (N*600) : (P*73), where N is your new number of shares and P your previous number of shares (= your number of B shares), which will be slightly different. And in the fairly unlikely event that you received a fractional entitlement payment, you almost certainly should (*) deduct it from your old base cost before the apportioning - but I suspect it's pretty unlikely that you did: certificated and CREST-account holders are only likely to have done so if their previous number of shares had remainder 1 when divided by 8 (giving them a fractional entitlement of 7/8th of a share, which probably had a value over the £5 minimum payment), and I suspect nominee-account holders had either that chance or none at all, depending on what their broker's terms & conditions say about how they handle such situations.
Incidentally, the possibility strikes me that the closely-linked splitting off of the B shares and enforced purchase of them shortly afterwards, clearly using funds provided by the company to do the purchase, might count as a capital distribution by the company. If so and the amount you receive for your B shares is under £3,000, it will be a 'small' capital distribution and you'll have the option of using the much simpler small-capital-distribution tax treatment for it. That treatment is just to reduce the base cost by the B share payment and neither do any apportionment nor calculate any immediate capital gains and losses - except that if the base cost is less than the B share payment, you only reduce it to zero and take the rest of the B share payment as an immediate capital gain. I do emphasise though that I'm only talking about a
possibility - I don't know that it counts as a capital distribution, I just don't see any clear reason why it doesn't, given that you have no choice between receiving it as capital and as income...
(*) I say "almost certainly should" rather than "must" because this is also an example of the small-capital-distribution treatment, meaning (a) that in the extremely unlikely event that the fractional entitlement payment is more than the existing base cost, that treatment is to use part of it to reduce the base cost to zero and take the rest of it as a capital gain; (b) you never
have to use the small-capital-distribution treatment if you don't want to. You can use the standard apportionment treatment instead - and that can be beneficial in terms of the amount of CGT you have to pay, and if it is, it will be a question of whether the amount-of-CGT benefit is worth the extra effort needed to get the apportionment treatment right. For a fractional entitlement payment that will be at most slightly above £5, the CGT benefit will be at most about 20% of that, i.e. little above £1 - so I would go for the small-capital distribution treatment regardless! For larger (but still 'small') capital distributions, it won't be as clear-cut as that...
Gengulphus