Income Tax Act 2007 section 136

Disposals of new shares

Section 136 restricts share loss relief when an individual disposes of "new shares" that have been identified with previously held "old shares" following a share reorganisation, and the shares are not linked to EIS relief.

• This section applies only to shares that do not carry Enterprise Investment Scheme (EIS) relief.
• Where new shares are treated as the same asset as old shares under a share reorganisation (section 127 TCGA 1992), share loss relief on disposal of the new shares is denied unless one of two conditions is satisfied.
• Condition A is met if the individual would have qualified for share loss relief had they disposed of the old shares at arm's length at the time of the reorganisation, assuming the reorganisation rules had not applied.
• Condition B is met if the individual paid new monetary consideration for the new shares, but relief is then capped at the amount of that new consideration included in the loss calculation.