Taxation of Chargeable Gains Act 1992 Schedule 2 paragraph 19

Reorganisation of share capital, conversion of securities etc.

Schedule 2 paragraph 19 deals with how share reorganisations and conversions of securities interact with the rules for assets held on 6 April 1965, establishing deemed disposal and reacquisition points for computing chargeable gains.

• Shares or securities held on 6 April 1965 that form part of a new holding following a reorganisation are treated as sold and immediately reacquired at their market value on that date.
• Where a new holding arises after 5 April 1965, it is treated as sold and reacquired at market value at the time of the reorganisation, creating a break point for the time apportionment calculation.
• Gains are calculated in two stages: first by time-apportioning the gain or loss up to the reorganisation date, and then by bringing into account the full gain or loss from the reorganisation date to the date of actual disposal.
• The paragraph does not apply where the reorganisation simply changes the number of shares held without changing the class of shares — for example, a straightforward share split or consolidation.