This example shows how to record a share split in COW2000.
See Help Sheet IR285 [74Kb] for the Inland Revenue's rules about share reorganisations.
MEGACORP share history
Each transaction carries a £20 overhead to represent broker's commission etc.
Purchases
Split Announcement
Purchases
~ On 10 June 2000 you buy 200 shares @ 80p with a Gross Cost of £180.00
~ On 10 June 2001 you buy 500 shares @ 100p with a Gross Cost of £520.00
~ On 10 June 2002 you buy 300 shares @ 120p with a Gross Cost of £380.00
Sales~ On 10 June 2001 you buy 500 shares @ 100p with a Gross Cost of £520.00
~ On 10 June 2002 you buy 300 shares @ 120p with a Gross Cost of £380.00
~ On 10 June 2003 you sell 400 shares @ 115p with a Net Return of £440.00
Split Announcement
~ On 10 June 2004 MEGACORP announce a share split of 2 for 1.
Identify the shares sold and the shares remaining
You sold 400 shares in 2003. The Inland Revenue tax rules, outlined in Help Sheet IR284 [83Kb], define how these should be matched against purchases for the calculation of capital gains.
Allocating shares from the purchases in reverse chronological order:
~ 10 June 2002 300 shares with a Gross Cost of £380.00
~ 10 June 2001 100 shares with a Gross Cost of £104.00 (1/5 of the 2001 purchase)
Your current holding corresponds to the remaining purchases:
~ 10 June 2001 400 shares with a Gross Cost of £416.00 (4/5 of the 2001 purchase)
~ 10 June 2000 200 shares with a Gross Cost of £180.00
You sold 400 shares in 2003. The Inland Revenue tax rules, outlined in Help Sheet IR284 [83Kb], define how these should be matched against purchases for the calculation of capital gains.
Allocating shares from the purchases in reverse chronological order:
~ 10 June 2002 300 shares with a Gross Cost of £380.00
~ 10 June 2001 100 shares with a Gross Cost of £104.00 (1/5 of the 2001 purchase)
Your current holding corresponds to the remaining purchases:
~ 10 June 2001 400 shares with a Gross Cost of £416.00 (4/5 of the 2001 purchase)
~ 10 June 2000 200 shares with a Gross Cost of £180.00
Rename the shares and sell your current holding at cost price
~ Rename "MEGACORP" to "MEGACORP-Pre-Split".
~ On 10 June 2000 sell 200 shares @ 80p with a Net Return of £180.00.
~ On 10 June 2001 sell 400 shares @ 100p with a Net Return of £416.00.
These sales generate no capital gains liability.
~ Rename "MEGACORP" to "MEGACORP-Pre-Split".
~ On 10 June 2000 sell 200 shares @ 80p with a Net Return of £180.00.
~ On 10 June 2001 sell 400 shares @ 100p with a Net Return of £416.00.
These sales generate no capital gains liability.
Recreate the original share and repurchase, applying the split
~ Create a new share named MEGACORP.
Applying the 2 for 1 split, we must repurchase:
~ 10 June 2000 buy 400 shares @ 40p, with a Gross Cost of £180.
~ 10 June 2001 buy 800 shares @ 50p, with a Gross Cost of £416.
When you eventually sell your MEGACORP shares, it is these purchases which will be used to calculate your capital gains liability.
~ Create a new share named MEGACORP.
Applying the 2 for 1 split, we must repurchase:
~ 10 June 2000 buy 400 shares @ 40p, with a Gross Cost of £180.
~ 10 June 2001 buy 800 shares @ 50p, with a Gross Cost of £416.
When you eventually sell your MEGACORP shares, it is these purchases which will be used to calculate your capital gains liability.
Note
When you sell all the renamed shares (MEGACORP-Pre-Split) and your holding becomes 0, the share will not appear on the share list unless "All Assets" is selected in the bottom left corner of COW2000.
When you sell all the renamed shares (MEGACORP-Pre-Split) and your holding becomes 0, the share will not appear on the share list unless "All Assets" is selected in the bottom left corner of COW2000.