Taxation of Chargeable Gains Act 1992 Schedule 7ZB paragraphs 4–5

Receipt of replacement value

Schedule 7ZB paragraphs 4 and 5 deal with how shares that would otherwise lose their eligibility for investors' relief — because the investor received value from the company — can be rescued if equivalent or greater value is returned to the original supplier.

• Where an investor receives value that would normally disqualify shares from investors' relief, the disqualification can be reversed if replacement value of at least equal amount is returned to the original supplier through a qualifying receipt at or before the point the shares would become excluded.
• A qualifying receipt includes payments to the original supplier, overpaying for an asset acquired from the supplier, transferring an asset to the supplier below market value, reversing an event that created the original value, or repurchasing share capital or securities at no less than the original value.
• Certain routine commercial payments — such as fair-value payments for goods and services, reasonable interest on loans, market-rate rent, ordinary trade debt settlements, and fair-price share purchases — are excluded from counting as qualifying replacement value.
• The replacement value is disregarded if it has already been used to offset another receipt of value, if it was received before the restriction period began, or if it was not received as soon as reasonably practicable after the original value was received.