Income Tax Act 2007 section 48

Relief after an exchange of shares for shares in another company

Section 48 sets out transitional rules for how share loss relief applies where shares have been exchanged for shares in another company, specifically where the new shares were issued before 6 April 2007.

• For new shares issued before 6 April 2007, the normal rules in section 145 are modified so that HMRC must have given advance clearance that the share exchange was for genuine commercial reasons and did not form part of a tax avoidance scheme or arrangement.
• This advance clearance requirement replaces the standard condition in section 145(1)(e) and must be obtained on application by either the new company or the old company before the new shares are issued.
• The reference to a scheme or arrangement is to the type described in section 137(1) of the Taxation of Chargeable Gains Act 1992, which deals with arrangements designed to avoid tax.
• Section 145 does not apply at all to shares issued before 6 April 1998, meaning this share exchange relief is unavailable for those earlier issues.