Income Tax Act 2007 section 146

Substitution of new shares for old shares

Section 146 explains how share loss relief rules apply when an individual's old shares are exchanged for new shares in a company reorganisation, ensuring continuity of treatment by stepping the new shares into the shoes of the old ones.

• Where an individual (or their nominee) holds new shares received in exchange for old shares that they originally subscribed for, and those old shares did not have EIS relief attributed to them, special rules apply
• For the purposes of any future disposal or other event, the new shares are treated as though the individual subscribed for them at the same time and for the same amount as the original old shares
• The new shares are also treated as having been issued by the new company at the time the old company originally issued the old shares, and any share loss relief requirements met by the old company before the exchange are treated as met by the new company
• These continuity rules do not apply in relation to certain provisions concerning the receipt of royalties and licence fees under section 195(7) as applied by section 137(7)

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