This information is provided as indicative guidance only. Prudential plc accepts no responsibility for the use that may be made of this information. This does not constitute tax or financial advice and must not be relied upon as such. Any person wishing to calculate their United Kingdom chargeable gains should consider their own particular circumstances and consult an appropriate professional adviser.
A disposal of Prudential shares may give rise to a chargeable gain (or allowable loss) for the purposes of UK capital gains tax, depending on the circumstances and subject to any available exemption or relief. No indexation allowance will be available in respect of any disposal of Prudential shares. However, the capital gains tax annual exemption (which is £12,300 for individuals in the 2020/21 tax year) may be available to exempt any chargeable gain, to the extent that the exemption has not already been utilised. Capital gains tax is charged at a rate of 10% or 20% depending on the individual’s total taxable gains and income in the tax year in question.
A disposal of Prudential shares may give rise to a chargeable gain (or allowable loss) for the purposes of UK corporation tax, depending on the circumstances and subject to any available exemption or relief. Corporation tax is charged on chargeable gains at the rate applicable to that Prudential shareholder.
How to identify the shares disposed of and related cost
Where a holding of shares has been acquired through a series of transactions over a period of time, and only part of the holding has been disposed of, there are special rules to identify which shares have been disposed of. In addition, where there have been company reorganisations such as bonus issues and rights issues, these need to be taken into account when calculating the tax base cost of shares disposed of. Please consult an appropriate professional adviser if these complexities arise.
31 March 1982 value
If some or all of the shares sold were acquired before 31 March 1982, the market value at 31 March 1982 is used in computing the chargeable gain.
The unadjusted 31 March 1982 market value for Prudential plc (then Prudential Corporation plc) was £2.4675 (source – ICE Capital Gains Tax service checked via ICAEW Library service).
May 1988 Share split
In May 1988 each Prudential share was split into 5 shares (thus reducing the nominal price from 25p shares to 5p shares). No consideration was paid by shareholders in this transaction. This share split did not affect the total tax base cost of shares held prior to May 1988 but the base cost per share was adjusted.
For example, if a shareholder had acquired 1,000 shares for £7,500 (£7.50 per shares) prior to May 1988, the tax base cost immediately after the share split would have become 5,000 shares at a cost of £7,500 equivalent to £1.50 per share.
October 2004 Rights issue
In October 2004 Prudential offered a Rights Issue where shareholders were invited to subscribe for further Prudential shares on the basis of 1 new share for every 6 existing shares held, at a price of 308 pence each.
For historic holdings of shares to which the 2004 rights issue applied, the tax base cost is adjusted by adding the new shares acquired in the rights issue together with the price paid to the historic holding of shares and historic price paid.
• If you had bought 1,200 shares in 2003 at £4 per share, the historic tax base cost would be £4,800
• In the rights issue, you would have received 200 new shares costing £616
• The revised holding is now 1,400 shares costing £5,416 (equivalent to £3.8686 per share)
October 2019 M&G demerger
In October 2019, Prudential demerged M&G Prudential (now M&G plc) by way of a dividend in specie. Shareholders received 1 share in M&G plc for every 1 share held in Prudential.
The pre-M&G demerger tax base cost of Prudential plc shares is apportioned between the post-demerger Prudential plc shares (86.2374%) and the M&G plc shares (13.7626%). Further information on this base cost apportionment is contained here.