Santander Capitalisation issue Nov-Dec 2020

[BobGe]

Hi, Anyone got a handle of the UK tax treatment of this issue and the value (if any)?
https://www.investegate.co.uk/banco-san ... 13311818F/

[pochisoldi]

At first glance -
a) The new share issue has been structured to avoid treatment as a dividend, in order to meet the ECB's requirements. (i.e. done for non-tax reasons).
b) As far as I can see, anyone taking the shares will see the number of shares in their S104 pool increase, but the pooled cost will remain the same.
C) Any one who sells their rights will have to do a CGT calculation based on a nil acquisition cost. Put another way, any profit will be a capital gain, not income at taxed as such.

Pochisoldi

[Gengulphus]

At first glance -
...
C) Any one who sells their rights will have to do a CGT calculation based on a nil acquisition cost. Put another way, any profit will be a capital gain, not income at taxed as such.

I'm a bit surprised about the "nil acquisition cost" part of that, because the closest equivalent standard UK corporate action would seem to me to be when a company pays a stock dividend of another type of share. My understanding of those, and of other types of corporate action in a similar area such as bonus issues and rights issues, is that the CGT computation generally involves an apportionment of the base cost, or in some cases treatment of the sales proceeds as a potentially-small capital distribution.

Of course, Banco Santander isn't a UK company, and I don't think I've ever seen a UK corporate action of the type (i.e. essentially a 1-for-23 bonus issue, but the ability to sell an intermediate step in the process), so I'm not saying you're wrong - but I'm interested in why you think a nil acquisition cost is appropriate.

Gengulphus