Taxation of Chargeable Gains Act 1992 section 151BB

CITR: rights issues etc.

Section 151BB deals with how share reorganisations such as rights issues are treated for capital gains tax purposes where the shares are held in a Community Development Finance Institution (CDFI) and Community Investment Tax Relief (CITR) is involved.

• Where a share reorganisation (other than a corresponding bonus issue) affects shares in a CDFI to which CITR is attributable, the normal rules that treat the original and new shares as the same asset do not apply — the original shares and any new shares or debentures are treated as separate assets with their own acquisition dates and costs.
• The disapplying of normal reorganisation treatment only applies where the investor has held the relevant shares continuously from the date of issue until the reorganisation, and CITR remains attributable to those shares or the newly allotted shares immediately after the reorganisation.
• Where a reorganisation involves a conversion from shares into qualifying corporate bonds (or vice versa), the special deferred gain rules under section 116(10) are also disapplied, provided the shares have been held continuously and CITR was attributable to them immediately before the transaction.
• Corresponding bonus shares — meaning bonus shares in the same company, of the same class and carrying the same rights as the existing holding — are excluded from these rules and continue to be treated under the normal reorganisation provisions.