What Basis to Use?

[PompeyJohn]

Probably a very naïve question, but it’s a new topic area for me. Over a period, I built up a holding of over 4000 shares in Stagecoach. The total cost to me, including charges and Stamp Duty, was a little over £8300.
In October 2011, the company carried out a return of capital and simultaneously converted my shares at the rate of 4:5. I received a cash sum of about £2K and my shareholding 'shrank' to about 3500.
So far, so good. I now want to 'Bed & ISA' the shares (which pay a fair dividend), and need to be sure that I understand the basis for calculating any capital gain (or loss).
If I sold the shares now, I would receive about £7.3K. That is less than the £8.3K I paid originally, so it looks like a loss for CGT purposes; good news for me. On the other hand, if I measure it against the 'net cost' of about £6K, it is a gain rather than a loss. Or perhaps there is an even more complicated way I should be looking at it.
I can find no useful guidance on the HMRC website as to whether to take account of the return of capital, and - if so - exactly how. I would welcome any explanation of how to calculate my gain or loss.

[pawncob]

http://www.stagecoach.com/~/media/Files ... aintax.pdf

http://www.stagecoach.com/~/media/Files ... aintax.pdf

http://www.stagecoach.com/~/media/Files ... axgain.pdf

There's a full history here so you can determine at what point you first bought the shares and their base cost.

[PompeyJohn]

Thanks for that. Quite a lot of reading and interpreting to do! Still, it will keep me out of mischief for a bit

[PompeyJohn]

Pawncob has pointed me very helpfully to the relevant guidance from Stagecoach. The most recent document, relating to the 2011 restructuring, is the one relevant to my particular circumstances. However, the more I read, the more I realise the depths of my ignorance! The guidance is written, I think, so as to cover a wide variety of possible transactions, whereas mine were pretty straightforward - I bought shares before the 2011 return of value, have held them since, and now plan to sell the whole lot.

The guidance mentions D Shares; looking through my correspondence I see that I was awarded one D share for each of the Ordinary shares I owned, but Stagecoach bought them back immediately at about 47p, which I received as a capital sum of about £2K. Simultaneously, I also received - like every other shareholder - 4 new shares for every 5 old ones.

The guidance from the company says that "The combined holding of New Shares will be treated as the same asset, acquired at the same time and for the same consideration as the Existing Ordinary Shares". I find this a bit ambiguous; does the 'combined holding of New Shares' include the D shares as well as the new Ordinary shares? I believe that is the intended meaning, because the guidance goes on to say "On a disposal of the whole or any part of the New Shares (ie being a disposal of a New Ordinary Share or a D Share) . . . base cost for the disposed shares should be apportioned between the New Shares in proportion to their respective market values . . . " This starts getting hair-tearingly complicated when all I have done is sell all of my D shares and none of my others.

In my case, I accepted the company's offer to buy all my D shares at 47p (which had been described in the correspondence as a return of capital), so I assume that this counts as a disposal. So perhaps I should (notionally, at least) have carried out some sort of apportionment exercise; but I didn't. Since I sold them all, and none of my others, perhaps this didn't matter, either at the time or now.

That was several years ago, during which period I have not disposed of any of the New shares I received in the October 2011 restructuring. I am now (as I think I said earlier) planning to sell the whole lot, and am at a loss as to how to calculate my gain or loss for CGT purposes. Although I have waffled on at length, I think my question boils down to a simple one. My original holding cost me about £8K; is that the 'base cost' for CGT purposes, or should I deduct the £2K (47p per share) return of capital?