Taxation of Chargeable Gains Act 1992 section 169Q

Reorganisations: disapplication of section 127

Section 169Q allows individuals to elect out of the normal "no disposal" treatment on share reorganisations so that business asset disposal relief (formerly entrepreneurs' relief) can be claimed on the deemed disposal at the time of the reorganisation.

• When shares are reorganised, exchanged or reconstructed, the normal rule treats the original and new shares as the same asset with no disposal occurring — but an election under this section can override that treatment so a chargeable gain arises at the point of reorganisation
• If the election is made and a claim for business asset disposal relief is submitted, the reorganisation is treated as a disposal of the original shares, potentially securing the 10% CGT rate that might otherwise be lost if, after the reorganisation, the qualifying conditions (such as personal company status) are no longer met
• The election must be made by the individual, or jointly by the trustees and qualifying beneficiary where trust business assets are involved — and it applies to all shares in the reorganisation, not selectively to some of them
• The deadline for the election is the first anniversary of 31 January following the tax year in which the reorganisation takes place — for example, for a reorganisation in 2024/25, the deadline would be 31 January 2027