Taxation of Chargeable Gains Act 1992 Schedule 7D paragraph 16

Rights issues in respect of qualifying shares

Paragraph 16 of Schedule 7D disapplies the normal share reorganisation rules where the shares affected are qualifying shares held by an individual.

• This provision applies when an individual holds qualifying shares that are subject to a share reorganisation, such as a rights issue.
• The normal rules that treat original shares and new holdings as the same asset (sections 127 to 130) are switched off for qualifying shares.
• This means a reorganisation involving qualifying shares is not automatically treated as producing no disposal — a chargeable event may arise instead.
• The effect is to prevent the share reorganisation provisions from preserving the qualifying status of shares through corporate restructuring events.