Section 255E — Taxation of Chargeable Gains Act 1992: Reorganisations involving shares to which SI relief is attributable

Reorganisations involving shares to which SI relief is attributable 255E 1 Subsection (2) applies if an individual holds shares which form part of the ordinary share capital of a company and include shares of more than one of the following kinds—

a shares to which SI relief is attributable and to which subsection (3) applies, b shares to which SI relief is attributable and to which subsection (3) does not apply, and c shares to which SI relief is not attributable and to which subsection (3) does not apply.

2 If there is a reorganisation within the meaning of section 126 affecting the shares listed in subsection (1), section 127 applies separately to those shares so that shares of each kind are treated as a separate holding of original shares and identified with a separate new holding.

3 This subsection applies to any shares if—

a expenditure on the shares has been set under Schedule 8B to this Act against the whole or part of any gain, and b in relation to the shares there has been no chargeable event for the purposes of that Schedule.

4 If—

a an individual holds shares (“the existing holding”) which form part of the ordinary share capital of a company, b there is, by virtue of any such allotment for payment as is mentioned in section 126(2)(a), a reorganisation affecting the existing holding, and c immediately following the reorganisation, SI relief is attributable to the existing holding or the allotted shares, sections 127 to 130 do not apply in relation to the existing holding.

5 Subject to subsection (6), sections 135 and 136 do not apply in respect of shares to which SI relief is attributable.

6 Subsection (5) does not have effect to disapply section 135 or 136 in a case where the original shares are shares to which SI relief is attributable if—

a the new holding consists of new ordinary shares which meet conditions A and B of section 257L of ITA 2007, b the new shares are issued after the end of three years beginning with the day on which the original shares were acquired, c before issuing the new shares, the company had issued shares which met conditions A and B of section 257L of ITA 2007, and d the company issued a compliance certificate in relation to those earlier shares for the purposes of section 257PA(1) of ITA 2007 and in accordance with sections 257PB and 257PC of ITA 2007.

7 In subsection (6) “ new holding ” is to be construed in accordance with sections 126, 127, 135 and 136.

8 In this section— “ ordinary share capital ” has the meaning given in section 989 of ITA 2007; “ ordinary shares ”, in relation to a company, means shares forming part of its ordinary share capital.