Income Tax (Trading and Other Income) Act 2005 section 150

Conversion etc. of securities held as circulating capital

Section 150 provides relief when securities held as circulating capital of a securities dealing trade are converted or exchanged, mirroring the capital gains tax roll-over relief that applies to securities held as capital assets.

• When securities held as trading stock are converted or reorganised in a way that would qualify for CGT roll-over relief, the new holding is treated as the same asset as the original — no disposal is recognised for trading profit purposes.
• If the trader receives additional consideration (cash or other assets) alongside the new holding, only a proportionate part of the original holding is rolled over, calculated using the formula NH / (NH + C), where NH is the market value of the new holding and C is the value or amount of the additional consideration.
• The section does not apply where the securities are already accounted for at fair value in the period of the transaction — those cases are dealt with separately under section 149.
• The definition of "securities" is broad, covering shares, government and corporate loan stock, unit trust rights, offshore fund interests, interests in companies without share capital, quoted share options, and earn-out rights.