Taxation of Chargeable Gains Act 1992 section 236F

Reorganisation of share capital involving employee shareholder shares

Section 236F ensures that the normal capital gains tax rules for share reorganisations do not apply to exempt employee shareholder shares, so that the tax-exempt status of those shares is preserved correctly.

• When a company reorganises its share capital, converts securities, or carries out a share exchange, special rules normally treat old shares and new shares as the same continuous holding for capital gains tax purposes.
• Section 236F disapplies these standard reorganisation rules (found in section 127 of TCGA 1992) where the shares involved are exempt employee shareholder shares.
• This means exempt employee shareholder shares are not automatically pooled or merged with replacement shares received in a reorganisation, preserving their separate exempt status.
• The section was introduced by Finance Act 2013 with effect from 1 September 2013 and was subsequently amended by Finance Act 2017.

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