Tax and your investments

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18. Share splits

Share splits are another way for companies to increase the number of shares in issue, reduce the market price of each and hence make their shares more marketable.

Example

• You hold 1000 Ord £1 shares in Company A - bought on 10/10/89 for 100p each inclusive of costs. Your base cost is therefore £1,000
• The company does a "1 for 1" share split on 15.6.97
• You now own 2000 Ord 50p shares in Company A bought for an average 50p each. Your base cost is still £1,000 for 2000 shares.

In other words, the share split is not a chargeable event for capital gains purposes. Its effect is to reduce pro rata the base cost of each share you own, but leave the base cost of the entire holding unchanged. It also leaves your percentage holding unchanged.

1. Keeping it legal 2. How HMRC treats your investment income 3. Keeping records 4. The basis of dividend income 5. Dividend income 6. Interest income 7. Interest on Treasury Stock 8. Capital gains tax basics 9. Base cost 10. Indexation 11. Taper relief 12. Indexation and taper relief - together! 13. Date of acquisition 14. Disposal proceeds 15. Disposal of a holding with a history 16. Takeovers 17. Bonus/scrip issues 18. Share splits 19. Buybacks 20. Rights issues 21. Share options 22. Beneficiaries and minors 23. Calculating your CGT liability 24. Using your annual CGT exemption 25. Transfers between spouses 26. ISAs 27. Delaying capital gains 28. Other tips to reduce CGT liability 29. Conclusion