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Share Reorganisation

A Share Reorganisation is a general term used to describe a range of share transactions that include:

The most common transactions include bonus issues, right issues and share splits. Both Bonus and Rights Issues involve new shares being allotted to some or all of the existing shareholders in proportion to their share holdings. In a rights issue the allotment is provisional until the shareholder accepts that they will pay for the shares. An example of a share split in the UK is when one 100 pence ordinary share may be split into five 20 pence ordinary shares.

From a taxation perspective basic Capital Gains Tax rules apply to UK share reorganisations, mainly:

  • the issue of any new shares is not treated as an acquisition
  • the loss of alteration of any old shares is not treated as a disposal

Please note that when dealing with UK share reorganisations, any shares purchased on or before 5th of April 1998 and sold prior to 5th April 2008 are subject to indexation allowance (relief).

Managing Share Reorganisations using TimeToTrade

TimeToTrade's portfolio tools include a Share Reorganisation wizard to make managing your share portfolio simple. TimeToTrade will even make the necessary adjustments to your base cost for Capital Gains Tax calculations.

TimeToTrade provides support for a full range of UK Share Reorganisations that include:

To enter a share reorganisation, use the drop down navigation menus to go directly to the share section of the account that you would like to add, edit or delete transactions in, as illustrated in the following screen shot:

Portfolio Accounts Actual Shares.png

or click on the Portfolio Account name:

Investment Overview 2.png

On the Investments section of the Portfolio Account, click on the 'share reorganisation button' displayed below the Open Positions, as illustrated:

Reorg 1-2.png

After clicking on the 'share reorganisation' button, you will be presented with the following screen. Enter the date that the share reorganisation occurred using the drop down calendar or by manually typing the date. When you have entered the date, click on the submit button.

Reorg 1-3.png

Now select the company that you would like to reorganise. To do so use the drop down menu and select the appropriate company ticker symbol as illustrated. In this example we are going to select the ticker symbol for Carphone Warehouse (CPW.L):

Reorg 1-4.png

After selecting the company that you would like to reorganise, select the type of share reorganisation that you would like to carry out using the drop down menu as illustrated:

Reorg 1-5.png

You will now be presented with the following screen:

Reorg 1-6.png

Working from left to right there are a number of text boxes and a drop down menu that can be used to enter a variety of share reorganisation entries. Not all of the fields have to be completed and the following provides an overview of what information should be entered into each field:

  • symbol = the ticker symbol of the share that is being reorganised or the symbol for a new class of share received
  • share issue ratio (new : old) = enter the ratio of the new to old share OR leave blank and use the 'shares issued' field
  • shares issued = enter a positive number for new shares issued (e.g. "500") or enter a negative number for shares removed or cancelled (e.g. "-500"). If you have entered a share issue ratio this field can be left blank and the number of shares added or removed will be based on the share issue ratio
  • fractional shares = if you received a fraction of a share after the share reorganisation, then use the drop down menu to select 'YES'. Typically in the UK fractional shares are not issued therefore the default 'NO' setting should be used, as in NO fractional shares where received. Fractional shares are more commonly associated with overseas investments and UK Unit Trust and OEICs reorganisations.
  • issue price = this field is used to capture the value of the share if there is for example a Rights Issue or if more than one class of share is involved in the share reorganisation. Please note that the value entered must be in Pounds, Euro, Dollars etc and not in pence for UK stocks.
  • cash received = Enter any fractional, small or large cash payment received. TimeToTrade provides full UK Taxation support for fractional, small and large cash payments received as part of a share reorganisations. Please note that the value entered must be in Pounds, Euro, Dollars etc and not in pence for UK stocks.

In this example we are going to assume that there has been a Capital Reorganisation of Carphone Warehouse shares. Let us assume that there is a 7:9 share consolidation of existing CPW.L shares and one class B share issued (i.e. CPW_B.L) for every ordinary share you owned before the share reorganisation. As a second class of share is issued, the price of the shares on the date of the share reorganisation is required in order to apportion cost between the two classes of shares. Let us assume that the CPW.L shares were valued at £3.00 and the CPW_B.L shares were valued at £1.25 on the day of the share reorganisation. If this example wasn't complicated enough, we will add in a fractional share payment of £2.50 received as a result of the 7:9 consolidation or the CPW.L ordinary shares.

To enter this share reorganisation, firstly enter the CPW.L share reorganisation details as illustrated:

Reorg 1-7.png

After entering the CPW.L share reorganisation details, click on the 'add another' button to enter the CPW_B.L share reorganisation details as illustrated:

Reorg 1-8.png

When you have finished entering the share reorganisation details click on the 'submit' button. A summary of the share reorganisation will be displayed as illustrated:

Reorg 1-9.png

Click on the return to ledgers link to view the share reorganisation transactions in your ledgers.

For help on how to enter specific types of share reorganisations please click on one of the following links:

If you are having any difficulty please contact us

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