Taxation of Chargeable Gains Act 1992 section 236Q

Relief for deemed disposals under section 71

Section 236Q provides capital gains tax relief when shares in a company pass from one trust (the transferring settlement) to another trust (the acquiring settlement) that qualifies as an employee ownership trust, and the transfer triggers a deemed disposal under the trust rules.

• When trustees of an employee ownership trust become absolutely entitled to shares held in another settlement, a deemed disposal arises under section 71, and the transferring trustee may claim relief so that neither a gain nor a loss is treated as arising on that deemed disposal
• The relief is only available if the settled property consists of ordinary share capital and the same qualifying conditions that apply to direct disposals of shares to employee ownership trusts (under section 236H) are satisfied
• The claim must include details identifying the acquiring settlement, the company name and registered office address, the number of employees of the company (or trading group) at the date of deemed disposal, and the date and number of shares involved
• The relief may be prevented or withdrawn if a disqualifying event occurs, as set out in section 236R, and the claimant need not provide the employee count if all reasonable steps to ascertain it have been taken without success, provided the claim includes a statement to that effect