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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 ‘underlyingâ€� 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 | |———————–|—————————–|——————�-|——————|———————————|——–|——| | £80 | £100 | £150 | £200 | £90 | None | (1) | | £80 | £100 | £150 | £200 | £180 | £50 | (2) | | £80 | £100 | £150 | £200 | £140 | £40 | (3) | | £80 | £100 | £150 | £140 | £200 | £40 | (4) | | £80 | £100 | £150 | £130 | £140 | £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.