# The Capital Gains Tax (Parallel Pooling) Regulations 1986, Part II: QUALIFYING SECURITIES WHICH ARE NOT RELEVANT SECURITIES


STEP 1—Regulation 5(a)–(c)
Index the indexed pool as if an operative event had occurred immediately before 1st April 1985
Indexed pool (see Part I.3, above)
£31,652
£31,652 × 116 − 114 114 = £31,652 × .018
570
£32,222
Therefore—
A = 9,000
B = 30,000
C = 32,222.
STEP 2—Regulation 5(d) and (e)
Number of securities not within 1983 holding (see Part I.4, above)
3,000
Relevant allowable expenditure
£10,000
Therefore—
D = 9,000 + 3,000 = 12,000
E = 30,000 + 10,000 = 40,000.
STEP 3—Regulation 5(f)
F = 10,000.
STEP 4—Regulation 5(g) and (h)
Number of securities held on 31st March 1982
1,000
Rights issue 1 for 1
1,000
G = 2,000
Relevant allowable expenditure on securities
= £6,000
Relevant allowable expenditure on rights 1,000 @ £2 per share
= £2,000
H = £8,000.
STEP 5—Regulation 6
J = 2,000 × 40,000 40,000 + 10,000
= 1,600
K = £8,000 × 40,000 40,000 + 10,000
= £6,400
Therefore the 1982 holding comprises:
1,600 shares—relevant allowable expenditure £6,400.
Note: applying the above fraction to the separate components of H (step 4) £4,800 will qualify for indexation from March 1982 and £1,600 from September 1983 for the purposes of section 87 of, and paragraph 5 of Schedule 13 to, the Finance Act 1982.
STEP 6—Regulation 7
Number of securities in the 1983 holding forming part of new holding = 9,000 − 1,600
= 7,400
Relevant allowable expenditure on these securities = £30,000 − £6,400
= £23,600
Aggregate of relevant allowable expenditure and indexation allowance for the purposes of paragraph 13(2), Schedule 19
= ( 30,000 − 6,400 ) ⁢ ( 32,222 30,000 + 0.05 )
= £26,528.
STEP 7—Regulation 8
Number of securities in new holding = 12,000 − 1,600
= 10,400
Qualifying expenditure = £40,000 − £6,400
= £33,600
Relevant allowable expenditure in relation to securities not included in 1983 holding
= £10,000
Indexation allowance
= £180
Indexed pool in relation to the new holding
= £26,528 + £10,000 + £180
= £36,708.
SUMMARY
1982 holding: 1600 securities—relevant allowable expenditure £6,400 (of which £4,800 qualifies for indexation from March 1982 and £1,600 from September 1983).
New holding: 10,400 securities—qualifying expenditure £33,600 and indexed pool of expenditure £36,708.

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Source: https://www.legislation.gov.uk/uksi/1986/387/schedule/part/II (the official version)
Page: https://openlegislation.uk/capital-gains-tax-parallel-pooling-regulations-1986/schedule/part-II
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.