Taxation of Chargeable Gains Act 1992 Schedule 5B paragraph 7

Reorganisations

Schedule 5B paragraph 7 deals with how share reorganisations are treated when an individual holds shares that carry different types of tax relief, ensuring that deferral relief status is preserved correctly through the reorganisation.

• Where an individual holds ordinary shares in a company with different relief statuses, a share reorganisation must treat each category of shares as a separate holding rather than pooling them together.
• The three categories are: shares with both deferral relief and EIS income tax relief; shares with deferral relief only; and shares with no deferral relief.
• Each category is matched to its own separate new holding after the reorganisation, preserving the relief status of each group of shares.
• Where a reorganisation involves a rights issue (an allotment of shares for payment) and the existing holding or newly allotted shares carry deferral relief, the normal share reorganisation rules do not apply — the shares are not automatically treated as the same asset.