CIRD20440 - Reinvestment relief: groups of companies: expenditure on shares of company which becomes group member: examples

CTA09/PART8/S778

The examples below illustrate the interaction of:

  • the rule that the deemed expenditure on the acquisition of new assets is the lesser of the cost of the shares and the tax written down value of the 鈥榰nderlying鈥� assets (see CIRD20430),
  • the general computational rules for reinvestment relief in CIRD20200 onwards.

| Tax value
old asset | Original
cost old
asset | Proceeds
old asset | Cost of
shares | Tax value
underlying
assets | Relief | Note | |鈥斺€斺€斺€斺€斺€斺€斺€搢鈥斺€斺€斺€斺€斺€斺€斺€斺€斺€搢鈥斺€斺€斺€斺€斺€斺€�-|鈥斺€斺€斺€斺€斺€攟鈥斺€斺€斺€斺€斺€斺€斺€斺€斺€斺€攟鈥斺€斺€搢鈥斺€攟 | 拢80 | 拢100 | 拢150 | 拢200 | 拢90 | None | (1) | | 拢80 | 拢100 | 拢150 | 拢200 | 拢180 | 拢50 | (2) | | 拢80 | 拢100 | 拢150 | 拢200 | 拢140 | 拢40 | (3) | | 拢80 | 拢100 | 拢150 | 拢140 | 拢200 | 拢40 | (4) | | 拢80 | 拢100 | 拢150 | 拢130 | 拢140 | 拢30 | (5) |

Notes

  1. Tax value of underlying assets less than original cost of old asset - see CIRD20220.
  2. Tax value of underlying assets and cost of shares exceed realisation proceeds; all profit over original cost rolled over - see CIRD20210.
  3. Tax value of underlying assets less than realisation proceeds of old asset; not all proceeds reinvested; profit to be rolled over restricted to the excess of that tax value over the cost of the old asset - see CIRD20220.
  4. Cost of shares less than realisation proceeds and tax value of underlying assets (which exceeds the proceeds); relief restricted as if the cost of the shares is equal to the tax value of the underlying assets - see CIRD20430.
  5. As (d) but tax value of underlying assets does not exceed the realisation proceeds; relief again restricted as if the cost of shares is the tax value of the underlying assets - see CIRD20430.